How much can my business borrow?

"How much can I get?" is usually the first question a business owner asks, and the honest answer is: it depends on which product and which lender. But lenders are not guessing. They use a few standard methods, and once you understand them you can estimate your own range, spot an offer that is too big for comfort and walk into the conversation with realistic expectations.

Every number in this guide is illustrative. Each lender sets its own rules, and the only real answer comes from an actual offer. This is general information, not financial or tax advice.

The three ways lenders size an offer

1. Revenue: how much money flows through your business bank account each month.
2. Cash flow: how much is left after expenses, and how much debt payment that can cover.
3. Collateral: the value of what secures the loan, such as equipment, real estate or unpaid invoices.

Fast, short-term products lean mostly on revenue. Bank loans and government-backed loans lean mostly on cash flow and collateral. Many lenders look at all three and offer the lowest number that passes every test.

Method 1: monthly revenue

For products like working capital and merchant cash advances, the lender's starting point is your average monthly deposits, taken from recent business bank statements. They will usually strip out anything that is not real revenue: transfers between your own accounts, loan proceeds, owner deposits and refunds.

Offers are then sized in general terms as a portion or small multiple of that monthly figure. As an illustration only, an offer on a short-term product might land somewhere between half and one-and-a-half times average monthly revenue, depending on the business, its history and its existing debt. Some lenders go higher for strong files; many go lower for newer or riskier ones.

Lenders in our network generally look for at least 1 year in business and an average of $20,000 or more in monthly bank deposits, among other criteria. Typical short-term terms run up to 24 months, with daily, weekly, bi-weekly or monthly payments depending on the lender and the file. These are typical ranges, not a promise.

The deposit test

The multiple is only the first cut. The lender then checks whether the payment fits your deposits. Here is an illustrative example:

• Average monthly deposits: $40,000, which is about $9,231 a week ($40,000 × 12 ÷ 52).
• A $30,000 merchant cash advance at an illustrative factor rate of 1.30 means a total payback of $39,000.
• Repaid over 40 weeks, that is $975 a week, or about 10.6% of weekly deposits.

Whether 10.6% of deposits is comfortable depends on your margins. A business with thin margins may struggle to give up that share; one with healthy margins may not notice. Before you accept, work out what that payment does to a slow week, not an average one. Our guides on factor rate vs APR and whether a merchant cash advance is worth it explain the cost side.

What lowers a revenue-based offer

• Existing advances or daily debits. A lender counts what you already owe. See MCA stacking.
• Negative balances and returned payments. Frequent overdrafts suggest the business is already stretched.
• Uneven deposits. A lender may size from your weaker months. Seasonal businesses should explain their cycle up front.
• Short history. Less history usually means a smaller first offer.

Method 2: cash flow and DSCR

Banks, SBA lenders and CSBFP lenders focus on whether the business earns enough to repay. The standard measure is the debt service coverage ratio (DSCR):

DSCR = cash flow available for debt payments ÷ total annual debt payments

"Cash flow available" is usually close to net operating income: revenue minus operating expenses, before interest, and often with non-cash items like depreciation added back. Each lender calculates it slightly differently, and many adjust for owner salary or one-off items.

A DSCR of 1.00 means you earn exactly enough to cover your debt payments, with nothing to spare. Lenders want a cushion. Many look for something like 1.20 to 1.25 or higher, as an illustrative range, so that a bad quarter does not mean a missed payment.

Worked DSCR example

All figures are illustrative.

• Annual cash flow available for debt: $180,000
• Existing debt payments: $36,000 a year (for example, a vehicle loan and an equipment lease)
• Lender's minimum DSCR: 1.25

Step 1. The most total debt payment the lender will accept is $180,000 ÷ 1.25 = $144,000 a year.

Step 2. Subtract what you already pay: $144,000 − $36,000 = $108,000 a year of room, or $9,000 a month.

Step 3. Convert that monthly payment into a loan amount. At an illustrative 12% a year over 5 years, a $9,000 monthly payment supports a loan of about $404,600. At an illustrative 20% over the same term, the same payment supports only about $339,700.

Check: the new payment is $9,000 a month, or $108,000 a year. Add the existing $36,000 and total debt payments are $144,000. $180,000 ÷ $144,000 = 1.25, exactly the lender's minimum.

Two lessons follow. First, the rate and term change the answer as much as your profit does: a longer term or lower rate means a smaller payment, so the same cash flow supports a bigger loan. Second, the DSCR result is a ceiling, not a target. Borrowing right up to the minimum leaves no room for a slow season. And the lender will still apply its other tests, so the final offer may be lower.

Method 3: collateral and loan-to-value

When a loan is secured by an asset, the lender also asks how much that asset is worth and how easily it could be sold. The measure is loan-to-value (LTV): the loan amount divided by the asset's value.

For equipment financing, lenders often finance a large share of the purchase price when the equipment holds its value, such as trucks, construction machinery or medical equipment. Specialised or fast-depreciating equipment may need a bigger down payment. Used equipment may be financed at a lower LTV than new, and some lenders only finance new.

Worked equipment example

Illustrative figures only:

• Machine price: $120,000
• Lender finances 90% of the price, so the down payment is 10%, or $12,000
• Amount financed: $108,000
• At an illustrative 10% a year over 60 months, the payment is about $2,295 a month, or about $137,681 in total

The lender will still check that your cash flow covers $2,295 a month comfortably. The equipment makes approval easier; it does not replace the ability to pay. Our guide on equipment financing vs leasing covers the choice between owning and leasing.

For invoice factoring, the "collateral" is your unpaid invoices. Advances are typically an illustrative 80% to 95% of invoice value, so the amount you can access grows with your sales. See how invoice factoring works.

Other things that move the number

• Credit. Personal and business credit affect both the amount and the price. Our guide on business loans with bad credit explains what changes.
• Time in business. More history usually means larger offers and longer terms.
• Industry. Some industries are seen as riskier and get smaller offers or shorter terms.
• Use of funds. Money for an asset or a contract that brings in revenue is easier to justify than covering losses.
• Program limits. Government-backed loans have their own maximums. See SBA 7(a) vs 504 and the CSBFP explained.

How much should you borrow?

The maximum a lender will offer and the amount that is good for your business are different questions. A useful approach:

1. Start from the actual need: the quote, the invoice, the payroll gap. Borrow for that, plus a modest buffer.
2. Work out the payment on your slowest realistic month, not your average one.
3. Check the total cost in dollars. A bigger offer at the same factor rate simply costs more.
4. Ask what happens if you want to pay early. Some products save you nothing for early payment.

If a bigger offer tempts you, remember that the payment stays even if the extra money sits unused. A line of credit can be a better fit for "just in case" money, because you usually pay interest only on what you draw.

How to get a realistic estimate

Gather your recent business bank statements (the most recent 3 months in the US and 6 months in Canada, all pages, as PDFs) and a fully completed application. Our documents checklist lists everything else. Then compare offers side by side using how to read a business loan offer.

CELER Funding is a free referral service, not a lender. We look at your numbers and introduce you to lenders that fit; the lender makes the decision and sets the amount and terms. We never charge you a fee; lenders may pay us a referral fee. See compare for how the products differ, or apply to get matched.