Compare unit economics across products
Side-by-side per-loan profit math for our two products vs. the Stripe Capital and Square Loans models. Each assumption is tagged with confidence: verified from public marketing or filings, estimated informed guess from indirect public hints, guess my own model assumption that needs validation.
| Product | Pricing | Ops | Loss | $1,000 | $5,000 | $10,000 | $25,000 | $50,000 | $100,000 |
|---|---|---|---|---|---|---|---|---|---|
Term Loan (current) BusinessLoan.ai | APR + orig | $300 | 3.0% | -$93 -9.3% · 6mo · -19% ann | $736 14.7% · 6mo · 29% ann | $1,771 17.7% · 6mo · 35% ann | $4,878 19.5% · 6mo · 39% ann | $10,055 20.1% · 6mo · 40% ann | $20,410 20.4% · 6mo · 41% ann |
Cash Advance (proposed) BusinessLoan.ai | Factor rate | $75 | 1.8% | $24 2.4% · 5mo · 6% ann | $424 8.5% · 5mo · 20% ann | $1,000 10.0% · 6mo · 20% ann | $2,987 11.9% · 8mo · 18% ann | $6,300 12.6% · 10mo · 15% ann | $14,425 14.4% · 11mo · 16% ann |
Stripe Capital Stripe | Factor rate | $25 | 1.5% | $104 10.4% · 4mo · 31% ann incl. +$42 proc | $622 12.4% · 4mo · 37% ann incl. +$210 proc | $1,351 13.5% · 5mo · 32% ann incl. +$420 proc | $4,322 17.3% · 7mo · 30% ann incl. +$1,050 proc | $8,669 17.3% · 7mo · 30% ann incl. +$2,100 proc | $18,987 19.0% · 9mo · 25% ann incl. +$4,200 proc |
Square Loans Block (formerly Square Capital) | Factor rate | $25 | 3.0% | $127 12.7% · 3mo · 51% ann incl. +$48 proc | $777 15.5% · 4mo · 47% ann incl. +$240 proc | $1,561 15.6% · 5mo · 37% ann incl. +$480 proc | $4,347 17.4% · 7mo · 30% ann incl. +$1,200 proc | $9,031 18.1% · 9mo · 24% ann incl. +$2,400 proc | $19,900 19.9% · 10mo · 24% ann incl. +$4,800 proc |
| Stripe Capital — annualized ROI on $1 deployed | 31% | 37% | 32% | 30% | 30% | 25% | |||
| Square Loans — annualized ROI on $1 deployed | 51% | 47% | 37% | 30% | 24% | 24% | |||
| Our Cash Advance (proposed) — annualized ROI on $1 deployed | 6% | 20% | 20% | 18% | 15% | 16% | |||
| Product | Tier A · low risk | Tier B · baseline | Tier C · approved-but-risky | Tier D / decline |
|---|---|---|---|---|
Term Loan (current) | 1.237× collection: Monthly profit: $4,499 | 1.252× collection: Monthly profit: $4,878 | 1.272× collection: Monthly profit: $5,382 | Manual review or decline |
Cash Advance (proposed) | 1.152× collection: 10% profit: $2,787 | 1.160× collection: 12% profit: $2,987 | 1.176× collection: 18% profit: $3,387 | Manual review or decline |
Stripe Capital | 1.150× collection: 10–12% profit: $4,082 | 1.160× collection: 13–18% profit: $4,322 | 1.179× collection: 20–25% profit: $4,802 | Algorithmic decline · no offer shown |
Square Loans | 1.161× collection: 9–10% profit: $4,135 | 1.170× collection: 11–13% profit: $4,347 | 1.190× collection: 18–22% profit: $4,857 | Algorithmic decline · no offer shown |
Ops cost ~$50/loan
Stripe and Square already have the merchant's revenue data, payment rail, and dashboard. Loan offer is pre-cached and accepted in 1 click. Zero document collection, zero manual review, near-zero marketing CAC.
Our standard term loan ops: $300 (full underwriting flow).
Loss reserve ~1.5%
Daily debit from sales eliminates the borrower's ability to “forget” a payment. If sales drop, debit drops proportionally — borrower can't default unless they have zero sales for an extended period.
Our standard term loan loss reserve: 3.0% Tier B, 6.0% Tier C.
Embedded distribution
Square has 4M+ merchants, Stripe has 4M+ accounts. They show the offer inside the merchant dashboard the customer is already using. CAC is essentially zero.
Our CAC: $300–$1,500 per funded loan via SEO + paid acquisition.
Three positions in the lending stack
Where you sit in the capital stack determines your per-loan profit AND the capital required to make it. Hybrid (B) wins on both absolute profit and ROI thanks to leverage from the senior bank facility — but it requires real equity at risk.
Risk exposure: Equity wiped out if defaults exceed ~20% (bank facility is senior)
At $25,000 per loan, Tier B, 6-mo terms.
| Position | Per-loan profit | Annual loan profit | Capital required (steady-state) | Annual ROI |
|---|---|---|---|---|
A · Originator only | $1,838 | $1,837,500 | $0 | ∞ |
B · Hybrid lender | $3,510 | $3,510,001 | $2,500,000 | 140% |
C · Pure capital partner | $2,460 | $2,460,001 | $12,500,000 | 20% |
Start as Hybrid (B) — best absolute profit + leverage. Keep ~$2-5M of equity at risk to start.
Mix in some forward-flow (Position A) on a slice of new originations to free up balance sheet.
Securitize. Your equity sits in residual tranche, blended cost of capital drops to ~4%.
The Cash Advance product hits Stripe-tier margins for repeat customers — without needing to be a payment processor.
Our renewal customers are already underwritten + connected via Plaid + processor-linked. Issuing them a revenue-share Cash Advance has near-zero incremental ops cost and a loss profile similar to Stripe/Square because we can debit from their existing connected processor sales. The first-loan path remains a standard Term Loan (full underwriting). Loan #2+ becomes a one-click Cash Advance with Stripe-tier economics.