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Annual revenue
Also called gross revenue, annual sales, gross receipts.
Total sales over twelve months before any costs, used as the headline sizing figure for most funding products and defined differently by almost every funder.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Revenue sizes the offer. Cash advance and revenue-based products are typically sized off recent monthly revenue and repaid as a share of it; banks and SBA lenders look at revenue alongside profit and debt service; factoring cares less about revenue than about who your customers are.
The problem is that revenue means at least three different things in a funding file. Tax return revenue is what you reported. Accounting revenue is what your books recognize. Bank deposit revenue is what landed in the account. A stipulated funding decision is usually made on the third, and the three rarely agree.
Deposits overstate revenue when they include transfers between your own accounts, loan or advance proceeds, owner contributions, refunds and credit card batch reversals. They understate it when customers pay to a merchant account that settles elsewhere, when you factor invoices, or when cash sales are deposited irregularly. Underwriters adjust for this, usually by scrubbing transfers and known funding deposits.
For SBA size standards, revenue has a formal definition. The agency uses average annual receipts calculated over a five-year period for most receipts-based standards, following the Small Business Runway Extension Act, and receipts are defined by reference to tax return figures rather than book revenue.
Where this one catches people
Stating annual revenue that your bank statements do not support is the fastest way to lose a file, and if the funding has already happened, a materially false revenue statement in the application is an event of default in its own right, with the personal guarantee behind it. Funders reconcile the stated figure to deposits as a matter of routine.
Worked through
A business reports 1.2m in annual revenue. Bank deposits over the same twelve months total 1.45m, which includes 150,000 of transfers between two of its own accounts and a 100,000 advance. Scrubbed deposits come to 1.2m, matching the return; the underwriter sizes the offer on that, not on the 1.45m.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
Where you will meet this term
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Annual revenue — common questions
What does annual revenue mean?
Total sales over twelve months before any costs, used as the headline sizing figure for most funding products and defined differently by almost every funder.
Where does annual revenue catch people out?
Stating annual revenue that your bank statements do not support is the fastest way to lose a file, and if the funding has already happened, a materially false revenue statement in the application is an event of default in its own right, with the personal guarantee behind it. Funders reconcile the stated figure to deposits as a matter of routine.
Is annual revenue the same as an interest rate?
Annual revenue is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does annual revenue apply to?
Merchant Cash Advance, Working Capital, Term Loan, Business Line of Credit, SBA Loan, Revenue-Based Financing.
Is there a worked example of annual revenue?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside annual revenue?
Annual revenue multiple, Average monthly deposits, Bank statement underwriting, Cash flow, Credit box.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.