Why I Stopped Caring About Position in Revenue-Based Funding

I read the receivables, not the rank.

The first question I hear in almost every funding conversation is some version of "what position are you in?" In revenue-based funding, that's become the default way to think about risk. After enough years doing this, I've come to think it's the lazy question.

When a business sells a portion of its future revenue for capital, it can stack one advance on top of another. The convention is to rank the risk by where you sit in that stack: first, second, third. But position only tells me where I stand in line for repayment. It tells me nothing about the thing I actually care about, which is whether the business generates enough consistent revenue to perform on everything it has already taken on.

I'll take a disciplined business in third position over a sloppy one in first, every time. I've watched it play out across the portfolio enough to trust it.

What I underwrite is capacity. Real revenue. Bank-statement consistency. Honest coverage of every obligation already on the books. That's the read that holds up when conditions get tight, and it's the discipline that separates durable revenue-based funding from the kind that blows up.

It matters more in 2026 than it has in years. The SBA has closed the ramp that businesses once used to refinance their advances through an SBA loan, and that demand is rerouting toward private capital. The opportunity is real. For me, it's only sound when I read the receivables instead of the rank.