Comparing Business Funding Offers: How to Read Three Quotes Side by Side Before You Sign
A dental practice owner in Forest Hills sent us a screenshot last month. Three offers had landed in her inbox in one afternoon, all for roughly $60,000, all with different headline numbers. One said “1.24.” One said “$1,150 a day.” One said “pay back $77,400.” She’d been staring at them for an hour trying to figure out which one was actually the cheapest.
Here’s the thing: they weren’t even close to being the same deal. One was quoted before fees, one after. One ran 5 months, one ran 8. The one that looked cheapest on the factor rate was the most expensive once you counted the origination fee and the term.
If you’ve got multiple offers on the table, this is the post for you. We’ll walk through how to line them up so you’re comparing the same thing, and where the numbers hide.
Why offers are so hard to compare
Funders and brokers quote the number that makes the offer look best. That’s not a conspiracy, it’s just sales. One shop leads with the factor rate. Another leads with the daily payment because it looks small. A third leads with the approved amount because it’s the biggest.
None of those numbers alone tells you what you’ll pay. To compare working capital offers, you need six numbers from each one, in writing:
- Gross advance amount (what the funder is “approving”)
- Fees deducted at funding (origination, underwriting, broker, ACH setup)
- Net funded amount (what actually hits your account)
- Total payback (the full dollar amount you owe)
- Payment amount and frequency (daily or weekly, and how many business days)
- Estimated term (how many months until it’s paid off)
Get those six and everything else is arithmetic.
The side-by-side table
Here are the three Forest Hills offers, translated into the same format. All three were advertised as about $60,000.
| Offer A | Offer B | Offer C | |
|---|---|---|---|
| Gross advance | $60,000 | $60,000 | $62,000 |
| Factor rate | 1.24 | 1.29 | 1.25 |
| Total payback | $74,400 | $77,400 | $77,500 |
| Fees at funding | $3,600 (6%) | $1,200 (2%) | $0 |
| Net funded | $56,400 | $58,800 | $62,000 |
| Payment | $1,240/day | $1,150/day | $1,550/day |
| Term | ~60 business days | ~67 business days | ~50 business days |
| True cost (payback minus net) | $18,000 | $18,600 | $15,500 |
Look at what happened. Offer A had the lowest factor rate, 1.24, and it still cost $18,000 because the 6% fee came off the top. Offer C had a factor rate of 1.25, a hair higher, but no fee, a bigger net deposit, and the lowest true cost at $15,500.
The “true cost” row is the one that matters: total payback minus the cash you actually receive. Nothing else on the page is as honest.
The cost per dollar test
A quick way to normalize any offer: divide the true cost by the net funded amount.
- Offer A: $18,000 ÷ $56,400 = $0.32 per dollar received
- Offer B: $18,600 ÷ $58,800 = $0.32 per dollar received
- Offer C: $15,500 ÷ $62,000 = $0.25 per dollar received
Now the three offers are speaking the same language. A and B land in the same place. C is meaningfully cheaper per dollar, but it also asks for $1,550 a day, which brings us to the part most people skip.
Cost isn’t the only filter: can your deposits carry the payment?
Offer C is cheapest, but $1,550 a day on a practice that deposits about $2,900 on a typical business day is more than half of daily revenue going out the door before payroll, supplies, and rent. That’s a cash flow problem waiting to happen, even if the total cost is lower.
Here’s a rule of thumb we use when we size a merchant cash advance or revenue-based advance for a client: the payment should run between 8% and 15% of your average daily deposits. Below 8% usually means the term is long and the cost is higher. Above 18% or so and you’re likely to feel it in payroll week.
For the dental practice:
| Daily payment | % of $2,900 avg daily deposits | |
|---|---|---|
| Offer A | $1,240 | 43% |
| Offer B | $1,150 | 40% |
| Offer C | $1,550 | 53% |
Wait, those are all way over 15%. What went wrong? The offers were sized to her gross monthly revenue of about $85,000, but a lot of her deposits arrive in lumps from insurance payers, not daily. Her actual average daily deposit was closer to $4,100 once we looked at six months of statements, which puts the payments at 28%, 30%, and 38%. Still heavy. The honest advice was to take a smaller advance, around $40,000, or ask for a weekly payment structure that matched when her insurance checks landed.
That’s the kind of thing you only catch by laying the offers next to your bank statements. If you want a second set of eyes on that, send us your numbers here and we’ll run it.
Where the numbers hide
Fees that come out of the advance
A “$60,000 advance” with 6% in fees is a $56,400 deposit. Ask for the net funded amount every time. If the funder won’t write it down, that tells you something.
Holdback vs. fixed payment
Some revenue-based funding is structured as a percentage of daily card sales (a split or holdback). Others are a fixed daily or weekly debit. Both are legitimate. The difference: a split payment flexes with your sales, which is helpful in a slow month, while a fixed debit is predictable but doesn’t care that you had a bad week. Ask which one you’re signing.
Term estimates versus actual term
On a fixed-payment deal, term is math. On a split deal, “approximately 6 months” can stretch to 9 if sales drop, and the total payback doesn’t change, so the effective cost goes up. Ask what the funder expects the term to be and what happens at the outer bound.
Renewal and early payoff language
Some funders offer a discount if you pay off early. Others charge the full payback no matter what. If you think you might pay off early because a big receivable lands, that clause is worth real money. We cover how that works in our post on prepayment discounts.
A five-minute comparison worksheet
Take each offer and fill in this, on paper if you have to:
- Net funded amount: $______
- Total payback: $______
- True cost (2 minus 1): $______
- Cost per dollar received (3 ÷ 1): $______
- Payment per business day: $______
- Payment as a % of average daily deposits: ______%
- Early payoff discount? Yes / No / Unclear
- Personal guarantee, UCC lien, confession of judgment? (Check the contract. We explain these in what you’re actually signing.)
Whichever offer wins on line 4 and doesn’t blow out line 6 is usually your answer.
When the cheapest offer is the wrong one
The lowest true cost isn’t always the best pick. Three cases where we steer owners away from it:
- The payment is too heavy. A cheap deal that starves payroll turns into a default, and default costs far more than a few extra points of factor rate.
- It’s a stack. If the offer sits in second or third position behind existing advances, the funder is pricing for that risk and the combined payments may be more than your deposits can handle. See our post on stacking advances.
- The funder is vague. If you can’t get the six numbers in writing, the price on the page doesn’t matter.
Who this applies to (and who it doesn’t)
This kind of comparison is for established businesses: a restaurant in Astoria, a contractor in Nassau County, an HVAC company in Bergen County, a salon in Park Slope. Typically $20,000 or more in monthly revenue, at least a year in business, and consistent deposits. We don’t fund startups or pre-revenue ideas, and if you’re not in that range, none of the offers above will look like these ones.
A quick word on brokers
A broker should put offers next to each other for you, not just forward the highest one. At BlueLine we show you the net funded amount, total payback, payment, and term for every offer we get back, including the ones we think are worse, and we tell you which one we’d take and why. If you want that done on your file, start here or call (212) 803-2032.
Want the offers laid out like this?
Send us your last three months of bank statements and any offers you’ve already received. We’ll build the side-by-side and tell you what we’d sign.
Get your offers compared → or call (212) 803-2032.
Frequently asked questions
What’s the single most important number when comparing offers?
True cost: total payback minus the net amount that lands in your account. It folds in the factor rate and every fee in one dollar figure.
Is a lower factor rate always cheaper?
No. A 1.24 factor rate with a 6% origination fee can cost more than a 1.25 with no fee. Always compare net funded amount against total payback.
How many offers should I collect?
Three is plenty. Beyond that you’re mostly adding noise, and some shops will run multiple credit pulls. Ask whether a quote is a soft pull before you give out your Social Security number.
Can I negotiate a funder’s offer?
Often, yes. Fees, the factor rate by a few points, and the payment schedule (daily to weekly) are the usual levers. Having a competing offer in writing helps.
What if two offers are close in cost?
Pick the one with the lighter payment relative to your deposits and the clearer early payoff terms. A cheaper deal you can’t comfortably carry isn’t cheaper.
Does comparing offers hurt my credit?
Not if the quotes are soft pulls, which is how ours work. Hard pulls from several funders in a short window can show up on your report, so ask first.
Should I take the biggest approval?
Usually no. Take what the purpose needs and what your deposits can support. Bigger advance means bigger payment and more total payback.
Ready for a straight comparison? Apply in 60 seconds or call (212) 803-2032.