What is paying the schedule?
Before comparing offers, finish this sentence: "This loan will be repaid by ___." If the answer is "a signed contract," "a second location that will open in June," or "a machine that adds jobs we are turning away," the loan has a purpose. If the answer is "normal revenue, somehow," it is a bridge in disguise, and another structure may fit better.
San Diego is well suited to the first kind of project. About 5 percent of civilian jobs in the county are military-related and 15,000 businesses in San Diego County rely on Department of Defense contracts, according to Wikipedia, so many local firms grow when a contract does. The city's tourism, trade and research sectors give others reasons to expand a second site or upgrade facilities.
Contract-backed or open-ended?
| Project | Repayment source | Risk |
|---|---|---|
| Add capacity for a signed supply contract | Contract revenue | The contract is delayed or reduced |
| Open a second location | New location's sales | Slow ramp-up |
| Upgrade facilities | Higher prices or volume | Customers do not respond |
| Replace aging equipment | Lower repair bills, more output | Savings are overestimated |
A stress test, for illustration
A San Diego supplier signs a contract worth $14,000 a month in extra revenue at a 30% margin and plans a $110,000 expansion. Margin is about $4,200 a month. If the monthly payment is $3,600, the expansion covers it with thin room. If the contract slips by two months, the owner must find $7,200 elsewhere. A bigger buffer, or a smaller first phase, would solve it. These numbers are invented to show the test, not our terms.
Before you sign any schedule
- Find the full repayment amount, including fees, and not only the monthly figure.
- Test the payment against your weakest month, not your average one.
- Check when the first payment falls relative to when the project begins earning.
- Ask whether you can repay early and how that changes what you owe.
For firms that depend on a single large customer, add one more question: what happens to the schedule if that customer pauses orders for a quarter?
Applying
We fund $25,000 to $5,000,000, with funding in as little as 24 hours once approved. We consider FICO scores of 500 and up, ask for about three months of business bank statements and do not require tax returns. The application takes about five minutes and uses a soft credit pull. Sole proprietors can apply. For a single machine, see equipment financing. For a shorter bridge, see working capital. If you need to compare, revenue-based financing flexes with sales. Owners in Vista, San Marcos, Escondido and Oceanside can apply.