Quick answer
Lenders typically count revenue as money the business has earned from its core trading activity, excluding VAT, intra-group transfers, director loans in, and one-off non-trading income. The exact definition varies by product: card-receipts lenders look at card volume only, invoice-finance lenders look at eligible B2B invoiced sales, term-loan lenders usually look at turnover net of VAT and adjusted for unusual items.
Top-line turnover, but not all of it
When lenders ask about your turnover, they usually mean trading revenue net of VAT. Inflated headline figures that include VAT, refunded sales, intra-company transfers or one-off receipts can produce a number that does not survive underwriting. Underwriters will reconcile the figure you stated against bank statements and accounts, and the smaller, cleaner figure usually wins.
Some categories are stripped out almost universally: director's loan deposits, VAT collected but not yet remitted, capital raised from equity rounds, asset disposals, insurance payouts. None of these are 'revenue' in the lender's working definition.
Product-specific definitions
Merchant cash advance lenders look at card-receipt turnover specifically, sourced from the card acquirer (Stripe, Worldpay, etc.). Other revenue streams - bank transfers, cash, invoiced B2B sales - usually do not count for an MCA, even if they are perfectly genuine.
Invoice finance lenders look at eligible B2B invoiced sales, excluding consumer sales, intra-group invoices and any debtors that fall outside the facility's terms (overseas, certain sectors, very small invoices). Eligible turnover is usually meaningfully smaller than headline turnover.
Revenue-based finance lenders for digital businesses look at platform sales - Shopify, Amazon, Stripe, app stores. Wholesale and bank-deposit revenue may or may not count depending on the lender.
Recurring revenue and contracted revenue
For SaaS and subscription businesses, lenders increasingly look at annual recurring revenue (ARR) or monthly recurring revenue (MRR) as a more important figure than headline turnover. Specialist revenue-based and venture-debt lenders may size a facility against ARR multiples rather than top-line accounts revenue.
Contracted future revenue - signed customer contracts not yet invoiced - can also be considered, particularly in trade finance and revenue-based deals. The lender wants evidence that the contract is real (signed, counter-signed, with named parties) before giving it weight.
Common revenue mismatches at underwriting
The most common mismatch is between the turnover figure declared in the quote application and the figure visible in twelve months of bank statements. Owners often quote the run-rate of their best recent month annualised, when underwriters work off rolling actuals.
Another common mismatch is between gross sales (including VAT and refunds) and net trading turnover. Underwriters typically work to net, so a declared figure that is gross can come down by twenty percent or more once normalised.
Group-company structures also cause confusion. Lenders care about the trading entity's revenue, not the group consolidated. If your company invoices a parent or sister, those intra-group flows usually get stripped out.
Key points
- Revenue means trading turnover net of VAT, not gross receipts.
- Director loans, capital raises and one-offs are stripped out.
- MCAs look at card receipts only; invoice finance at eligible B2B invoices.
- Recurring revenue often matters more than top-line for SaaS.
- Declared revenue is reconciled to bank statements and accounts.
Finance types that may be relevant
The product categories below are commonly considered for this situation. Suitability is subject to lender underwriting and your trading profile.
Merchant Cash Advance
Cash advance repaid as a share of card/POS/platform sales.
Invoice Finance
Funding advanced against unpaid B2B invoices.
Revenue-Based Finance
Growth capital repaid flexibly against future revenue.
Related guides
Frequently asked questions
- Does VAT-inclusive revenue count?
- Almost never. Lenders work to net-of-VAT figures because that is the actual trading income.
- What about cash sales?
- If they are banked and traceable, yes. If they are off the books, no - and that itself can be a risk flag at underwriting.
- Do grants count as revenue?
- Generally no for affordability purposes, though some lenders consider sustained grant income for established R&D-heavy businesses.
- Will lenders use forecast revenue?
- Rarely as a primary driver. They look at the recent twelve months of actuals first; forecasts only matter for sizing and stress-testing in some products.
Compliance note
Eligibility guidance only - not financial advice, not a loan offer, not a guarantee of approval.