Renewals: How a Second Round of Funding Gets Bigger and Cheaper

Most owners think of funding as a one-time event. Lenders think of it as a relationship, and the relationship pays off on the second round: more money, lower cost, less paperwork.

Why renewals are better

A first funding is underwritten on three months of statements and a soft credit pull. A renewal is underwritten on those plus months of on-time repayment to this lender. Risk is lower, so the offer improves: typically a larger amount, a better factor or rate, and a longer term.

When you become eligible

Usually once about half of the first balance is repaid, provided deposits have held or grown. Some businesses renew in as little as three months; longer-term products renew later.

How to earn the best renewal

• Make every remittance; a single missed payment costs more than it saves
• Keep deposits in the same account the lender already sees
• Use the first funding for something that visibly grows revenue
• Avoid stacking a second lender on top; it lowers the renewal offer
• Ask your specialist what the renewal looks like before you need it

Renewal vs refinance

A renewal adds new capital, often netting out the remaining balance. A refinance moves to a different structure, such as from revenue-based to a fixed term loan, as the business matures. Affirmative Funding offers both as the relationship grows.

A typical path

First round: $35,000 on $45,000 a month in revenue. Six months later: revenue at $55,000, renewal at $60,000 at a lower cost. A year on: a $150,000 term loan for a second location.