What Is Gross Revenue? | Business Lending Glossary
Gross revenue defined for business borrowers — what it measures, how lenders use it in underwriting, and how it differs from net income.
Definition
The total income a business generates from its operations before any expenses, deductions, or cost of goods sold are subtracted.
Explanation
Gross revenue is the top line of a profit and loss statement and represents the full value of all sales during a period. It differs from net revenue, which subtracts returns and discounts, and from net income, which subtracts all expenses. Alternative lenders frequently use gross monthly revenue as a primary underwriting metric because it reflects business activity even when net income is low.
Example
A retail store sells $85,000 in merchandise during a month; that figure is gross revenue before subtracting $42,000 in cost of goods and $30,000 in operating expenses.
Why It Matters
Many alternative lending products, including MCAs and revenue-based financing, size loan amounts and set repayment terms as a multiple or percentage of gross monthly revenue.
Frequently asked questions
Do lenders look at gross or net revenue?
Alternative lenders typically focus on gross revenue and bank deposit activity, while traditional lenders place greater emphasis on net income and profitability.
