How to Read a Small Business Funding Offer: 6 Line Items to Check

#The offer document is a contract, not a brochure

A funding offer from any lender, bank, alternative funder, or SBA, is a binding legal commitment once signed. Most small business owners sign within hours of receiving it, often without reading it carefully. Here are the six line items that determine whether the offer is what you think it is.

#1. Gross advance vs. net to bank

These are not the same number. The gross advance is the face value of the funding. The net-to-bank is the amount that actually hits your account after origination fees, document fees, and any balance applied to a prior advance are deducted.

If an offer says "$100,000 advance" and the net-to-bank column says "$92,000," that $8,000 gap is your day-one cost, before interest or factor rate begins. Always ask for both numbers in writing.

#2. Factor rate or interest rate

Factor-rate products express total repayment as a multiplier: 1.30 × $100,000 = $130,000 total repayment, period. APR-based products express the cost as an annualized percentage of the outstanding balance. These two numbers are not comparable without converting one to the other, use our factor-to-APR calculator before signing anything.

#3. Total payback amount

This is the single clearest number in any offer: the total dollars that will leave your account over the life of the agreement. On a $100,000 advance at 1.30 factor, total payback is $130,000. On a $100,000 loan at 18% APR over 24 months, total payback is roughly $119,500. Get this number in writing and verify the math independently.

#4. Daily / weekly payment amount

For ACH-based products, confirm the exact dollar amount that will be debited each business day or week. Compare this to your worst expected week of revenue. If your slowest week generates $8,000 in deposits and the daily ACH is $800 (approximately $4,000/week), you can cover it. If your slowest week generates $4,500 and the ACH is $1,000/day ($5,000/week), you cannot, and NSFs will follow.

#5. Prepayment terms

Factor-rate products typically do not offer an early-payoff discount, you owe the full factored amount regardless of how fast you pay. APR-based products may have a prepayment penalty, a declining prepayment schedule, or free prepayment. Confirm explicitly what happens if you want to pay off in month 3 of a 12-month term.

#6. Default triggers

Read the default section carefully. Stopping an ACH without written notice, taking a new advance without lender approval, closing the business bank account, or missing a payment can all trigger a technical default that allows the lender to accelerate the full balance. Most funders have a cure period (3–5 business days) for accidental missed payments, confirm this exists before signing.

#The quick self-check

Before signing any business funding agreement, calculate:

1. 1Net to bank (what I actually receive)
2. 2Total repayment (what I actually pay)
3. 3Total cost = (2) minus (1)
4. 4Cost as % of net funded = (3) ÷ (1)
5. 5Implied APR using our calculator

If any number surprises you, ask for an explanation before signing. Any funder unwilling to walk through these five numbers line-by-line is not a funder you want.