Why Many Smart Business Owners Choose Working Capital Financing Over SBA Loans (Even With Good Credit)
The Question Every Business Owner Asks: "I Qualify for a Bank Loan—Why Would I Pay More for Working Capital?"
If you're running an established business generating $50,000+ per month with solid credit and stable operations, you've probably heard this advice:
"Always choose the lowest interest rate. If you qualify for an SBA loan at 9.5%, you should never consider alternative financing at a higher cost."
Here's what 20+ years of facilitating over $1 billion in business financing has taught us:
This advice is financially illiterate.
Not because SBA loans are bad. They're excellent for specific purposes. But because it assumes all capital needs are the same, all opportunities have the same timeline, and the only metric that matters is interest rate.
Strategic business owners understand something most don't: The cost of capital is irrelevant if the opportunity generates massive returns and disappears before slow financing can close.
This article explains when and why many established, creditworthy business owners strategically choose working capital financing over traditional bank loans—and why this decision often generates significantly more profit despite the higher cost.
First, Let's Clear Up The Confusion: What You're Actually Comparing
Before we go further, you need to understand something most business owners don't realize:
These Are All The SAME Product With Different Names:
Merchant cash advance
Working capital loan
Cash flow financing
Revenue-based financing
Small business loan (from alternative lenders)
Merchant funding
Business cash advance
Same structure:
Lump sum of capital ($25K-$1.5M)
Short-term repayment (6-24 months typically)
Daily, weekly, biweekly, or monthly payments
Priced with factor rate or APR
Based on revenue and cash flow (not just credit)
Business owners waste hours shopping these different names thinking they're comparing different products. They're not. It's the same financing structure marketed under different names.
Business Line of Credit = DIFFERENT
Lines of credit work differently:
You get approved for a limit ($100K for example)
You draw only what you need ($20K)
You pay interest/fees only on what you draw
Revolving (pay down, draw again)
This article focuses on lump-sum working capital financing, not lines of credit.
What This Financing Actually Is:
Short-term revenue-based financing:
Get capital based on your revenue and cash flow
Receive lump sum upfront
Repay over 6-24 months from your revenue
Higher cost than banks because higher risk and no collateral
Much faster than traditional financing (same day vs. 90-120 days)
This is NOT:
A 10-year term loan
Collateral-based lending
Real estate financing
Long-term asset financing
Comparing working capital financing to SBA loans is like comparing a pickup truck to a sports car and asking "which is better?" Better for WHAT? They serve completely different purposes.
Who This Article Is For
This is written specifically for:
✅ Business owners generating $50,000-$500,000+ monthly revenue
✅ Established businesses (1-5+ years in operation)
✅ Good to excellent credit (650+ FICO)
✅ Profitable or break-even operations
✅ Manageable existing debt (total debt service under 35% of revenue)
✅ Business owners with time-sensitive growth opportunities
If that describes you, keep reading.
If you're struggling with declining revenue, overleveraged with debt, or looking for survival capital—this won't help you. Fix your operations first before considering any financing.
Quick Answer: When Does Working Capital Make More Sense Than an SBA Loan?
Choose working capital financing when:
✅ Time-sensitive opportunity (days or weeks, not months)
✅ Short-term capital deployment (30-180 days until ROI)
✅ Immediate revenue generation (clear, measurable return)
✅ Opportunity disappears if you wait (competitor will capture it)
✅ Expected ROI exceeds 200% (return justifies higher cost)
Choose SBA or bank financing when:
✅ Long-term asset purchase (real estate, major equipment with 10+ year life)
✅ Large capital needs ($500K+ where term loans are more cost-effective)
✅ No time pressure (you have 4-6 months to close)
✅ Low-ROI necessary expense (roof replacement, HVAC, non-revenue generating)
✅ Refinancing existing debt (no opportunity cost of waiting)
The deciding question: Does capturing this opportunity NOW generate more net profit than waiting 90-120 days for cheaper financing?
If yes → Working capital financing makes strategic sense.
If no → Wait for traditional financing.
The Reality of SBA Loan Timelines That Nobody Talks About
Let's be honest about what actually happens when you apply for an SBA loan:
The 90-120 Day Timeline (Minimum):
Week 1-2: Initial Application
Submit preliminary application
Provide initial documentation (tax returns, financials, bank statements)
Wait for loan officer review
Week 3-4: Document Requests
Additional document requests (SBA loans require 30+ documents)
Personal financial statements
Business plan or narrative
Explanation of use of funds
Equipment quotes or purchase agreements
Vendor estimates
Lease agreements
Organizational documents
Week 5-8: Underwriting
Underwriter reviews complete package
Questions arise (they always do)
More documentation requested
Clarifications needed
Appraisals ordered (if applicable)
Environmental reports (if real estate involved)
Week 9-11: Committee Review
Loan committee meeting (once per week or biweekly)
Conditional approval with stipulations
More documents needed to satisfy conditions
Back and forth with underwriter
Week 12-16: Final Approval & Closing
Final conditions satisfied
Closing documents prepared
Closing scheduled
Funding after closing
Total: 90-120 days MINIMUM (often longer)
And that's assuming:
No issues arise
All documents provided correctly first time
No appraisal delays
No committee rejections requiring restructuring
The Real Cost of This Timeline:
40-60 hours of your time as the business owner:
Gathering documents
Responding to questions
Coordinating with advisors
Following up on status
Attending closing
If your time is worth $150/hour (and it should be worth more), that's $6,000-$9,000 in opportunity cost just in your time.
Plus whatever opportunity you miss while waiting 4 months.
When Working Capital Financing Makes Strategic Sense: Real Scenarios
Let me show you exactly when established, creditworthy business owners choose working capital over SBA loans.
Scenario 1: Bulk Inventory Purchase at Steep Discount
Business Profile:
Retail operation
$180,000/month revenue ($2.16M annually)
6 years in business
720 credit score
22% gross margin, 12% net margin
Existing debt: One equipment loan, $3,200/month payment (16% debt service ratio)
Opportunity:
Primary supplier offering 45% discount on bulk inventory purchase
Must commit within 10 days
Purchase amount: $85,000 (normal price would be $155,000)
Inventory will sell through in 60-90 days (proven fast-moving SKUs)
Discount expires end of month (supplier clearing warehouse for new product line)
The Math:
Option A: Wait for SBA Loan
Apply for $85K SBA loan
Timeline: 90-120 days minimum
Discount expires in 10 days
Must purchase at regular price: $155,000
Using SBA loan at 9.5% over 10 years
Cost of inventory: $155,000 + interest over time
Lost discount: $70,000
Option B: Working Capital Financing
Apply for $85K working capital
Approved in 3 hours, funded next day
Factor rate: 1.28
Total repayment: $108,800
Cost: $23,800
Inventory sells in 75 days at normal retail pricing
Gross revenue from inventory: $195,000
Gross profit margin (22%): $42,900
Less working capital cost: $23,800
Net profit: $19,100 in 75 days
The "expensive" working capital financing generated $19,100 profit.
The "cheap" SBA loan would have cost $70,000 more in lost discount.
Which was actually cheaper?
This business owner chose working capital, captured the discount, turned the inventory in 75 days, generated profit, and moved on.
Six months later, when they needed to purchase new equipment with a 5-year life, they applied for an SBA loan. Different tool for different purpose.
Scenario 2: Equipment Purchase for Increased Production Capacity
Business Profile:
Light manufacturing
$320,000/month revenue ($3.84M annually)
8 years in business
740 credit score, strong financials
Operating at 95% capacity (turning away orders)
Existing debt: Building loan, 18% debt service ratio
Opportunity:
Equipment dealer has refurbished production machine
Normally $180,000, available for $95,000 (trade-in + year-end clearance)
Equipment increases production capacity by 65%
Current backlog of orders waiting for capacity
Two other manufacturers interested in the equipment
Decision needed within 5 days
The Math:
Current state:
Turning away $80,000/month in orders due to capacity constraints
Lost revenue: $960,000 annually
Option A: Wait for SBA Loan
Apply for $95K SBA loan for equipment
Timeline: 90-120 days
Equipment sells to competitor in week 1
Continue operating at 95% capacity
Continue turning away orders
Lost revenue while waiting: $240,000-$320,000
Eventually get SBA loan approved, but must buy new equipment at $180,000
Additional cost: $85,000 + lost revenue
Option B: Working Capital Financing
Apply for $95K working capital
Approved same day, funded next day
Purchase equipment day 3
Factor rate: 1.32
Total repayment: $125,400
Cost: $30,400
Equipment installed and operational within 2 weeks
Begin fulfilling backlog orders immediately
Additional monthly revenue: $80,000
Additional monthly gross profit (28% margin): $22,400
Equipment pays for itself in 5.6 months
Year 1 net profit after financing cost: $238,400
The business owner chose working capital, bought the equipment, increased capacity, fulfilled waiting orders, and generated $238,400 in additional profit the first year.
Waiting for the SBA loan would have meant losing the equipment deal and 3-4 months of additional revenue.
Scenario 3: Seasonal Business Preparing for Peak Season
Business Profile:
Landscaping company
$280,000/month average revenue ($3.36M annually)
Revenue heavily seasonal: 75% occurs April-October
5 years in business
695 credit score, profitable operations
Existing debt: Equipment loans, 22% debt service ratio
Opportunity:
Need to stock up on materials, hire seasonal staff, and purchase maintenance supplies before spring rush
Capital need: $120,000
Timeline: Must be ready by April 1 (prime season starts)
Current date: February 15
Peak season generates 75% of annual revenue in 7 months
The Math:
Option A: Wait for SBA Loan
Apply February 15 for $120K SBA loan
Timeline: 90-120 days = closes May 15 to June 15
Peak season already started without preparation
Under-staffed for first 6-10 weeks of peak season
Turning away jobs due to material shortages
Lost revenue in critical months: $180,000+
SBA loan closes after prime opportunity already missed
Option B: Working Capital Financing
Apply February 15 for $120K
Approved same day, funded February 17
Purchase materials, hire staff, prepare equipment by March 15
Fully operational for April 1 season start
Factor rate: 1.35
Total repayment: $162,000
Cost: $42,000
Repayment structure: Daily ACH during peak season (higher revenue = faster payback)
Paid back completely by end of August
Additional revenue captured: $280,000 (being fully prepared vs. scrambling)
Gross profit margin: 32%
Additional gross profit: $89,600
Less financing cost: $42,000
Net profit: $47,600
The seasonal business owner chose working capital in February, prepared fully for peak season, captured maximum revenue during critical months, and paid back the financing during high cash flow period.
Waiting for SBA would have meant missing the first 2 months of peak season—the most profitable months of the year.
Scenario 4: Contract Fulfillment Requiring Upfront Materials
Business Profile:
Commercial contractor
$420,000/month revenue ($5M annually)
7 years in business
710 credit score
Existing debt: Equipment and vehicle loans, 20% debt service ratio
Opportunity:
Awarded $380,000 municipal contract (competitive bid)
Requires $140,000 in materials upfront (concrete, steel, equipment rental)
Payment terms: Net 60 days after project completion
Project duration: 75 days
Contract includes penalty clause: $2,500/day for delays beyond 90 days
Materials must be ordered within 2 weeks to meet timeline
The Math:
Option A: Wait for SBA Loan
Apply for $140K SBA loan
Timeline: 90-120 days minimum
Project deadline is 90 days total
Cannot start project without materials
Options: (1) Turn down contract, (2) Use personal credit cards at 24% APR, (3) Try to renegotiate payment terms (unlikely with municipality)
Lost contract = $0 revenue + damaged reputation for future bids
Option B: Working Capital Financing
Apply for $140K working capital
Approved in 4 hours, funded next day
Order materials immediately
Begin project on schedule
Factor rate: 1.33
Total repayment: $186,200
Cost: $46,200
Project completed day 72
Municipality pays day 60 after completion (day 132 total)
Receive $380,000 payment
Pay off working capital immediately
Gross profit on contract: $158,000 (after materials and labor)
Less financing cost: $46,200
Net profit: $111,800
The contractor chose working capital, fulfilled the contract on time, avoided penalties, maintained reputation for future bids, and generated $111,800 profit.
Waiting for SBA would have meant losing the contract entirely.
Scenario 5: Second Location Expansion (Lease, Not Purchase)
Business Profile:
Restaurant
$240,000/month revenue ($2.88M annually)
4 years in business
680 credit score, profitable operations
Existing debt: Kitchen equipment loan, 19% debt service ratio
Opportunity:
Prime retail space available in growing area
Lease opportunity: $4,500/month (excellent rate for location)
Requires first/last/security: $13,500
Buildout and equipment for second location: $95,000
Existing location generates strong, predictable revenue
Model is proven and replicable
Space has 3 other interested parties
Landlord requires commitment within 10 days
The Math:
Option A: Wait for SBA Loan
Apply for $110K SBA loan (buildout + deposits)
Timeline: 90-120 days
Space leased to competitor within 2 weeks
Opportunity lost
Net result: $0
Option B: Working Capital Financing
Apply for $110K working capital
Approved in 3 hours, funded next day
Secure lease immediately
Complete buildout in 6 weeks
Open second location week 7
Factor rate: 1.30
Total repayment: $143,000
Cost: $33,000
Second location ramps up over 4 months
Steady-state revenue: $140,000/month from second location
Combined locations: $380,000/month
Additional monthly profit from second location: $28,000
Financing paid back in 7 months from additional revenue
Year 1 net profit (after financing): $303,000
Ongoing additional profit: $336,000/year
The restaurant owner chose working capital, secured the prime location, opened the second restaurant, and generated $303,000 in additional profit the first year (after paying back financing).
Waiting for SBA would have meant watching a competitor take the space.
The Pattern: Short-Term Capital for Short-Term High-ROI Opportunities
Notice the pattern in every scenario:
What working capital financing is used for:
✅ Opportunities with immediate ROI (30-180 days)
✅ Time-sensitive situations (opportunity disappears if you wait)
✅ Proven revenue models (inventory that turns, equipment that increases output, locations that work)
✅ Clear payback timeline from revenue generated
✅ High ROI that justifies higher cost (200-400% returns)
What working capital is NOT used for:
❌ Long-term assets (10+ year life)
❌ Speculative ventures (unproven models)
❌ Survival/operating shortfalls (covering bills, making payroll)
❌ Low or no ROI necessary expenses (roof repair, HVAC replacement)
❌ Acquisitions of businesses or real estate
The fundamental principle: If the opportunity generates massive immediate returns and disappears before slow financing can close, working capital financing generates more profit despite higher cost.
Why "Higher Cost" Doesn't Mean "More Expensive"
Business owners get this wrong constantly. They see:
SBA loan: 9.5% APR
Working capital: Factor 1.35 (roughly 40-50% APR if annualized)
And conclude: "The working capital is way more expensive."
This is financially illiterate thinking.
Here's the correct analysis:
Scenario: $100,000 Capital Need for Bulk Inventory Purchase
Option A: SBA Loan
Amount: $100,000
Rate: 9.5% APR
Term: 10 years
Total interest over 10 years: ~$55,000
Application to funding: 90-120 days
But the inventory discount expires in 2 weeks
Discount lost: $45,000
Total real cost: $55,000 + $45,000 = $100,000
Option B: Working Capital
Amount: $100,000
Factor rate: 1.35
Total repayment: $135,000
Total cost: $35,000
Funding: Next day
Capture discount, sell inventory in 60 days
Total real cost: $35,000
The "expensive" working capital cost $35,000. The "cheap" SBA loan cost $100,000 (interest + lost discount).
Which was actually more expensive?
The Correct Question to Ask:
Don't ask: "What's the interest rate?"
Ask: "What's the total net profit after all costs, including opportunity cost?"
Working capital at 1.35 factor that generates $150,000 profit = better than SBA at 9.5% that generates $0 profit because the opportunity was gone.
Understanding Risk-Based Pricing: Why Working Capital Costs More
Let's address the obvious question: "Why does working capital cost so much more than bank financing?"
Simple answer: Risk.
What Banks Require (Lower Risk = Lower Cost):
Excellent credit (720+)
Strong financials (multiple years of profitability)
Collateral (real estate, equipment, liens on assets)
Personal guarantee
Long underwriting process (verify everything)
Multiple layers of approval
Restrictive covenants
10-year commitment from borrower
Because of all this, their risk is LOW. Therefore, cost is LOW.
What Working Capital Lenders Accept (Higher Risk = Higher Cost):
Good to fair credit (as low as 600 in some cases)
Revenue and cash flow focus (profitability less critical)
No collateral required (unsecured)
Personal guarantee (but no hard asset backing)
Minimal underwriting (3-4 months bank statements)
Fast approval (same day)
Flexible terms
Short-term (6-24 months)
Because of all this, their risk is HIGHER. Therefore, cost is HIGHER.
This isn't predatory pricing. This is risk-based pricing.
Higher risk = higher cost. This is Finance 101.
You're paying for:
Speed (same day vs. 120 days)
Flexibility (no collateral required)
Accessibility (approved based on revenue, not just credit)
Certainty (fast decision, not 4 months of uncertainty)
If you want low-cost capital, accept the requirements: perfect credit, collateral, 4-month timeline, extensive documentation.
If you want fast, flexible capital, accept the cost: higher rate that reflects higher risk.
You can't have both.
The Strategic Framework: When to Use Each Type of Financing
Here's exactly how to think about this decision:
Use Working Capital / Revenue-Based Financing When:
1. Timeline is Critical
Opportunity window: Days or weeks
Waiting = losing the opportunity
Competitor will capture it if you delay
2. Short-Term Deployment
Capital will be deployed and generate returns in 30-180 days
Quick turn on inventory, equipment, or expansion
Not a 5-10 year asset
3. High ROI Opportunity
Expected return: 200%+ on capital deployed
Clear, measurable revenue generation
Proven model or proven product
4. Revenue/Cash Flow Can Support Repayment
Daily/weekly payments fit your cash flow cycle
Revenue is stable or growing
Debt service ratio stays under 35% of revenue
5. Speed Creates More Value Than Cost Savings
Getting capital in 1 day vs. 120 days materially changes outcome
Opportunity cost of waiting exceeds financing cost
Use SBA / Bank Financing When:
1. Long-Term Asset Purchase
Real estate (building purchase)
Major equipment with 10+ year useful life
Permanent fixtures or improvements
2. Large Capital Needs ($500K+)
Acquisition of business
Major expansion projects
Large-scale renovations
3. No Time Pressure
Opportunity isn't going anywhere
You have 4-6 months to plan and close
No competitive threat if you wait
4. Low or No ROI Projects
Necessary maintenance (roof, HVAC)
Regulatory compliance requirements
Non-revenue-generating improvements
5. Refinancing Existing Debt
Consolidating obligations
Improving cash flow
No opportunity cost of waiting
The Decision Tree:
Ask these questions in order:
Q1: Is this opportunity time-sensitive (will it disappear if I wait)?
Yes → Consider working capital
No → Consider traditional financing
Q2: Will this generate immediate, measurable ROI (within 180 days)?
Yes → Consider working capital
No → Consider traditional financing
Q3: Is the expected ROI high enough to justify higher cost (200%+)?
Yes → Working capital makes sense
No → Traditional financing makes sense
Q4: Is this a short-term deployment (6-24 months) or long-term asset (5-10 years)?
Short-term → Working capital
Long-term → Traditional financing
Q5: Can my cash flow support daily/weekly payments?
Yes → Working capital is feasible
No → Consider other structures
If you answer YES to questions 1-3 and can support the repayment, working capital financing likely makes strategic sense even if you qualify for traditional financing.
What About Combining Both?
Many strategic business owners use BOTH types of financing for different purposes.
Common pattern:
Working capital for:
Seasonal inventory preparation
Bulk purchase discounts
Equipment that increases immediate output
Contract fulfillment
Second location buildout
Traditional financing for:
Real estate purchase
Major equipment with long life
Business acquisition
Permanent improvements
Example:
A manufacturing business owner:
Uses $150K working capital in March to purchase bulk raw materials at discount (pays back in 90 days from production sales)
Uses $800K SBA loan in July to purchase the building they've been leasing (10-year amortization)
Different tools for different purposes. Both strategic.
The sophisticated business owner understands when to use each.
Red Flags: When NOT to Use Working Capital Financing or Merchant Cash Advances
Let me be very clear about when working capital financing is the WRONG choice:
❌ DON'T Use Working Capital or a Merchant Cash Advance If:
1. Revenue is Declining
Month-over-month revenue drops
No clear turnaround strategy
Borrowing to "fix" structural problems
Reality: Capital won't fix declining revenue—it will accelerate the problem
2. Using Capital for Operating Shortfalls
Making payroll
Paying rent or utilities
Covering existing debt payments
Keeping lights on with no revenue generation plan
Reality: This is survival mode, not growth mode—you'll create a debt spiral
3. Already Overleveraged
Existing debt service exceeds 35% of revenue
Multiple working capital advances already in place
Modified payment plans with existing lenders
Previous defaults
Reality: More debt won't help—you need to pay down existing obligations first
4. No Clear ROI Plan
"We just need cash"
Can't articulate specific use of funds
No timeline for how capital generates revenue
Speculative or unproven venture
Reality: If you can't explain how it generates returns, don't borrow
5. Long-Term Asset Purchase
Buying commercial real estate
Major equipment with 10-year life
Business acquisition
Reality: Use long-term financing for long-term assets—don't mismatch term and purpose
If any of these describe your situation, working capital financing is not the answer. You either need traditional financing, or you need to fix operational issues before taking on any debt.
How to Work With LVRG Business Funding
We've been direct lenders for over 20 years, facilitating more than $1 billion in business financing for 10,000+ companies.
Here's our approach:
We Work With Established Businesses
Ideal client profile:
Monthly revenue: $50,000-$500,000+
Time in business: 1+ years (prefer 2-5+ years)
Credit: Good to excellent (650+ FICO)
Operations: Profitable or break-even
Debt service: Under 35% of revenue
Use of funds: Specific growth opportunity with clear ROI
We fund strategic growth, not survival mode.
Our Philosophy
1. We'll Tell You If Traditional Financing Makes More Sense
If you're purchasing long-term assets, have no time pressure, or the ROI doesn't justify higher cost—we'll tell you to go to your bank.
We're not interested in funding deals that don't make strategic sense just to earn a fee.
2. We Analyze Your Complete Situation
What's the specific use of funds?
What's the expected ROI and timeline?
What's your current capital stack?
Is this strategic growth or survival mode?
Will this deployment generate sufficient returns?
3. We Have Standards
We decline deals that don't make sense. If you're overleveraged, declining in revenue, or borrowing for survival—we'll tell you no.
This protects you as much as it protects us.
4. We're Direct Lenders
No broker markup. No middleman. Fast decisions because we're making the lending decision ourselves.
What We Offer
Funding Amounts: $25,000 - $1.5 Million
Approval Time: 2-4 hours for most applications
Funding Speed: Same-day funding available (if approved before 2 PM EST)
Repayment Terms: 6-24 months typically, structured to match your cash flow
Repayment Frequency: Daily ACH, weekly ACH, biweekly, or monthly (depends on structure)
Requirements:
$50,000+ monthly revenue
3-4 months business bank statements
Valid business identification
Clear use of funds with ROI plan
Industries We Serve: Restaurants, Retail, Construction, Professional Services, Healthcare, Manufacturing, E-commerce, Hospitality, Service Businesses
Geographic Reach: Nationwide (all 50 states)
How It Works
Step 1: Apply Online (5-10 minutes)
Basic business information
Revenue details
Specific use of funds
Expected ROI timeline
Step 2: Quick Review (2-4 hours)
We review your bank statements
Analyze your capital stack
Evaluate your ROI plan
Provide honest feedback
Step 3: Approval & Funding (Same day possible)
Accept offer
Sign agreement electronically
Funds deposited to your business account
Deploy capital immediately
Step 4: Repayment from Revenue
Automatic daily, weekly, or monthly payments
Pay more when revenue is high, complete repayment faster
No prepayment penalties (pay off early and save)
Contact Us
Phone: (855) 998-5874
Email: info@lvrgllc.com
Website: LVRGFunding.com
Business Hours: Monday-Friday, 8 AM - 6 PM EST
Response Time: Under 3 hours for applications submitted during business hours
Apply online at LVRGFunding.com - Get a decision today, not in 4 months.
Frequently Asked Questions
If I qualify for a bank loan, won't using working capital hurt my ability to get traditional financing later?
No. Working capital financing is typically structured as a purchase of future receivables, not reported as traditional debt. It doesn't impact your ability to secure bank financing later the same way a term loan would.
Many of our clients use working capital for short-term opportunities, pay it back in 90-180 days, then pursue traditional financing for long-term assets. The two don't conflict.
What credit score do I need?
Minimum: 600 personal FICO for most programs.
Ideal: 650+ for best rates and terms.
However: We focus more on revenue and cash flow than credit alone. A business doing $200K/month with 650 credit will get approved easier than a business doing $60K/month with 720 credit.
How much of my revenue can go toward debt service?
Our guideline: Total debt service (all loans, advances, obligations) should not exceed 35% of gross monthly revenue.
Example: If you generate $150,000/month in revenue, your total monthly debt payments across all obligations should be under $52,500/month.
If you're already at or above 35%, we'll likely decline—not because we can't legally fund you, but because we've seen that debt level leads to problems.
Can I have multiple working capital advances at once?
Yes, but with limits.
We'll stack up to 2nd or 3rd position (meaning 1-2 other working capital lenders ahead of us), but only if:
Total debt service stays under 35% of revenue
You can clearly demonstrate ROI on the new capital
Your cash flow supports all payments comfortably
Revenue is stable or growing
We won't overleveraging you just to make a deal.
What if I pay off the working capital early?
No prepayment penalties. Ever.
In fact, many programs offer prepayment discounts:
Pay off in 90 days, get 5-10% discount on remaining balance
Pay off in 60 days, get 10-15% discount
Pay off in 30 days, get 15-20% discount
This incentive aligns with everyone's interest:
You want to pay off quickly to save money
We want to get capital back quickly to redeploy it
Win-win
How long does the approval process actually take?
For complete applications with bank statements provided:
Initial review: 1-2 hours
Decision: 2-4 hours from submission
Funding: Same day if approved before 2 PM EST
For incomplete applications:
We'll request missing information
Timeline depends on how quickly you provide it
Our goal: Decision within 4 hours of receiving complete application.
What's the difference between a factor rate and APR?
Factor rate is how working capital is typically priced:
Factor 1.30 = you repay $1.30 for every $1.00 borrowed
Borrow $100,000 at 1.30 factor = repay $130,000 total
Cost: $30,000
APR is annualized percentage rate:
Used for traditional loans
Assumes you hold the loan for a full year
Factor rates convert to higher APRs because the term is shorter
Example:
$100K at factor 1.30 paid back in 12 months = roughly 30% APR
Same $100K at factor 1.30 paid back in 6 months = roughly 60% APR
The APR looks scary, but you're not holding it for a year—you're paying it back in 6-12 months from the revenue it generates.
Focus on total dollar cost and ROI, not APR.
What industries do you NOT work with?
We generally don't fund:
Startups under 6 months old (insufficient operating history)
Cash-intensive businesses with inconsistent deposits (hard to verify revenue)
Businesses in decline with no turnaround plan
Industries with significant regulatory/legal risks
Speculative ventures or unproven business models
We focus on established businesses with operating history, measurable revenue, and clear growth opportunities.
The Bottom Line: It's About Strategy, Not Just Cost
After 20+ years in business lending, here's what we know for certain:
The most successful business owners don't ask: "What's the cheapest capital?"
They ask: "What capital structure generates the highest net profit for this specific opportunity at this specific time?"
Sometimes that's an SBA loan at 9.5% that takes 120 days.
Sometimes that's working capital at factor 1.35 that funds in 24 hours.
The difference? The opportunity, the timeline, and the ROI.
Two Business Owners, Same Opportunity, Different Decisions:
Owner A: Thinks Conventionally (Not Strategically)
Sees bulk inventory discount opportunity
Qualifies for SBA loan at 9.5%
Thinks: "I should always choose the lowest rate"
Applies for SBA loan
120 days later, discount expired
Pays full price for same inventory
Saved on financing cost, lost on purchase price
Net result: Lost $40,000
Owner B: Smart, Strategic Thinker
Sees same bulk inventory discount opportunity
Also qualifies for SBA loan at 9.5%
Thinks: "What generates the most net profit?"
Calculates: Discount saves $70K, working capital costs $25K, net gain $45K
Uses working capital, funds in 24 hours
Captures discount, turns inventory in 60 days
Pays higher financing cost, but nets $45,000 profit
Net result: Gained $45,000
Same qualification. Same opportunity. Different thinking. $85,000 difference in outcome.
The Pattern We See:
Struggling businesses: Borrow desperately, use capital for survival, focus only on "getting approved," don't plan ROI
Smart, successful businesses: Borrow strategically, use capital for growth, evaluate all options, choose tool that maximizes net profit
The product doesn't determine success. The borrower's strategy does.
Ready to Evaluate Your Options?
If you're generating $50,000+ monthly revenue and have a time-sensitive growth opportunity, we can help.
We'll analyze your situation honestly:
If working capital makes strategic sense, we'll move fast
If traditional financing makes more sense, we'll tell you
If neither makes sense right now, we'll explain why
Our goal isn't just to fund deals. It's to help business owners make strategic capital decisions that generate profit.
Contact LVRG Business Funding:
Phone: (855) 998-5874
Email: info@lvrgllc.com
Website: LVRGFunding.com
Apply online in 5 minutes. Get a decision in hours, not months.
Remember: The best capital isn't always the cheapest capital. The best capital is the capital that generates the highest net profit when deployed strategically at the right time for the right opportunity.
That's how smart, successful business owners think about financing.
Updated November 28, 2025 - This article reflects LVRG Business Funding's approach to strategic business financing for established companies. All information current as of this date.
Important Disclaimer: All rates, terms, and financial examples are for illustrative purposes only. Actual rates and terms vary based on business revenue, credit profile, time in business, industry, existing debt obligations, and other underwriting factors. Examples shown represent potential scenarios and do not guarantee similar results. Contact LVRG Business Funding for personalized rate quotes specific to your business situation.