Start with the job, not the ceiling
Funding is available from $25,000 to $5,000,000, which is a wide range. The temptation is to ask for as much as possible because the extra feels like a safety net. In practice every extra dollar has to be repaid out of future deposits, so the safety net is also a weight on your cash flow.
The better question is what specific thing the money will do, and what it costs. Write the answer as one sentence with a number in it: "Buy a second delivery van for $38,000," or "Cover six weeks of payroll while a large invoice clears." If you cannot write the sentence, you are not ready to pick an amount.
Three common reasons, three different sizing approaches
| Reason | How to size it | Typical mistake |
|---|---|---|
| Buy equipment or a vehicle | Quote plus installation, insurance and training; subtract any deposit you can cover | Forgetting the running costs that come with the asset |
| Bridge a payment gap | Fixed costs for the weeks until the invoice is paid, plus a small cushion | Sizing it to the invoice instead of to the gap |
| Stock up before a busy season | Cost of goods you expect to sell, not the whole shelf | Overbuying items that sell slowly |
Notice that none of the three methods starts from what is available. Each starts from a cost you can name.
The slowest-month test
Pull the last three months of bank statements and find the weakest month for deposits. Subtract your fixed costs for that month: rent, payroll, insurance, vehicle payments, utilities and existing obligations. Whatever is left is what you could realistically put toward repayment in a bad month.
For illustration, suppose your weakest month brought in $42,000 in deposits and your fixed costs were $36,000. That leaves $6,000 of room. If a new repayment would take $7,000 of that month, the amount is too large for your business as it stands, however strong the average months look. These numbers are an example, not our terms or a typical result.
This test is deliberately conservative. A business that can carry the payment in its slowest month rarely has a problem in a good one.
Warning signs you are asking for too much
- You cannot explain what each part of the amount pays for.
- You are planning to cover a loss that keeps repeating.
- The plan only works if sales jump right away.
- You would skip payroll or tax obligations to make the payment in a slow month.
- You are using new funding to cover payments on earlier funding without a plan to stop doing that.
What to include in your request
The application takes about five minutes and uses a soft credit pull. We consider FICO 500 and above and ask for about three months of business bank statements. No tax returns are required, and sole proprietors can apply. The amount you request should be one you have tested against your slowest month, then adjusted only if there is a concrete reason.
If you are unsure between two amounts, pick the smaller one and be ready to explain what you would do with more. You can apply here when your number is ready.