Retainers vs. Project Based Revenue in the eyes of SBA lenders

by a searcher from University of Washington

Mar 05,2023

Hi everyone,

I've seen a couple of creative agencies and consulting firms advertise a high portion of their revenue from retainers vs project based work. 

An SBA lender I spoke to said they don't like businesses with a high share of project based revenue because it's non-repeat. Does anyone have opinions on whether retainers have different risk profile both as a searcher and a lender?

Thanks for all the great information shared!

Eric

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searcher from University of Notre Dame

In general, recurring/subscription revenue is higher quality revenue than project-based/transactional revenue — certainly in the eyes of a risk adverse lender, but this is also true in a more objective sense. I highly recommend AJ Wasserstein's paper "On the Nature of Revenue": https://yale.box.com/s/2tx5o79dxjz3t5lvjexgoidg9ci2neyy

03/07/2023 | like reply | 0 likes

lender from Eastern Illinois University

I think I would need some additional context to the particular situation to provide you more detailed feedback, but I am more than happy to have a conversation. You can reach me directly at --@----.com or ping me here. Thank you.

03/06/2023 | like reply | 0 likes

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