Revenue Based Financing
Business Finance Companies on Inc 5000 List in 2025
August 12, 2025Here’s where small business finance companies rank on the Inc 5000 list for 2025 (and if we’ve missed you, email info@debanked.com):
Ranking | Company | 3-Year % Growth |
15 | Parafin | 9594 |
206 | businessloans.com | 1862 |
669 | Pinnacle Funding | 626 |
831 | SBG Funding | 508 |
1215 | Essential Funding Group | 359 |
1240 | Clara Capital | 352 |
1417 | Backd | 306 |
1705 | Kapitus | 256 |
1719 | Channel | 255 |
1756 | Fundible | 248 |
2027 | 4 Pillar Funding | 214 |
2117 | Biz2Credit | 203 |
2293 | Byzfunder | 187 |
2671 | Critical Financing | 156 |
3081 | Lendzi | 131 |
3226 | eCapital | 124 |
3508 | ApplePie Capital | 111 |
3545 | SellersFi | 109 |
3901 | Splash Advance | 95 |
3973 | Fora Financial | 92 |
3993 | Capital Infusion | 91 |
4076 | Expansion Capital Group | 88 |
4162 | Shore Funding Solutions | 85 |
4206 | Direct Funding Now | 83 |
4712 | ROK Financial | 63 |
Heron Makes Big Splash in Small Business Finance Industry
July 15, 2025Heron, a startup using AI to automate workflows, just raised a $16M Series A round. Already a well-known brand in the small business finance industry, the funds will be used to grow their presence, expand into adjacent verticals, and grow their go-to market & and engineering teams.
While Heron serves top tier clientele like insurance carriers and FDIC-insured banks, its technology can be utilized at almost any level.
“Our technology is built to serve funders of all sizes from industry leaders like Bitty, Forward, Vox, and CFG to sub-five person shops originating hundreds of thousands of dollars a month,” the company told deBanked. “If a team is receiving 25 or more submission documents per day, Heron can deliver immediate value by automating their document intake and reducing manual review time. Our platform scales to meet volume, and we often see smaller, fast-moving teams who want to scale submissions and originations without scaling headcount benefit the most from Heron.”
Heron noticed that small business lenders were employing teams of underwriting analysts that spend hours on repetitive intake work and created a process to streamline it within seconds. Consequently, they’ve seen that improving efficiencies in this market has had a positive impact on the economy overall.
“At Heron, we believe that SMB lending is the backbone of the American economy — it powers everything from local restaurants to trucking fleets,” the company said. “But outdated, document-heavy processes slow things down. Heron helps lenders move faster and smarter, so they can get capital to the businesses that need it most.”
FundKite, Aquamark Partner on Watermarking Submission Docs
June 17, 2025As more brokers rush to watermark submission documents to minimize the likelihood of their deals being backdoored, FundKite is codifying the trend into policy by partnering with Aquamark. Aquamark, as readers may recall, was recently spotlighted on deBanked for its defensive watermarking technology which enables brokers to stamp documents in a tamper-resistant manner, marking them as having originated from the broker. If these stamped documents end up in the hands of an unauthorized third party, the watermark reveals their original source. With watermarked submissions on the rise, FundKite will only accept them if they match the originating broker. The company will also encourage brokers to use Aquamark to protect their submissions if they aren’t already doing so.
“At FundKite, we take submissions very seriously and want to ensure that the documents we receive have been originated by the ISO submitting them and were not backdoored, which has been a major issue in the industry,” said Alex Shvarts, CEO of FundKite. “We encourage all our ISO partners to watermark their submissions for this reason. Aquamark provides a seamless and inexpensive process we tested and strongly recommend.”
“This partnership reflects a rapidly growing shift in the industry — brokers are fed up with deal theft, and they’re increasingly aware of how critical compliance will be over the next 12 to 24 months,” said Christina Duncan, Founder of Aquamark. “We’re grateful to partner with Alex at FundKite, who’s stepping up to address these challenges by reducing risk, building trust, and helping preserve the integrity of the space as it evolves.”
The Battle Against MCA in Texas
June 12, 2025David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies.To connect with David or schedule a call about working with Better Accounting Solutions, email david@betteraccountingsolutions.com.
Texas, a state associated with limited government intervention and freedom of business to operate and succeed in a capitalist society, stands at a crossroads.
Governor Greg Abbott has until June 22nd to decide whether to sign House Bill 700 into law—a decision that could fundamentally reshape how small businesses access capital in the Lone Star State. If he signs it, or simply lets the deadline pass without action, this sweeping legislation will take effect on September 1, 2025. The action will potentially cut off vital funding sources for thousands of Texas entrepreneurs, in a direct assault on the merchant cash advance industry that has been a lifeline for the people of his state.
The stakes couldn’t be higher. While supporters frame HB 700 as consumer protection, this bill targets sales-based financing—financial tools that have become lifelines for small businesses shut out of traditional bank lending.
Small business owners know the frustration of walking into a bank and walking out empty-handed all too well. Traditional lenders have tightened their belts, especially for newer businesses, minority-owned enterprises, and companies in industries deemed “risky.” When a restaurant owner needs quick capital to fix a broken freezer, or a contractor requires funds to purchase materials for a big job, they can’t wait weeks for a bank’s approval process. They need solutions now.
That’s where alternatives come in. Revenue-based financing provides capital based on future sales, not credit scores or lengthy financial histories. Yes, they can be more expensive than bank loans—but they’re also available when banks say no.
This financing drives business growth, job creation, and the health of Main Street. When small businesses can access capital quickly, they expand, hire employees, and strengthen their communities.
HB 700 goes far beyond simple disclosure requirements. While transparency is important—and most responsible providers already provide clear terms—this bill creates a regulatory maze that could price many providers out of the Texas market entirely.
The bill imposes sweeping new requirements that will fundamentally change how sales-based financing companies operate in Texas. Companies providing commercial sales-based financing must register with the Office of Consumer Credit Commissioner by December 31, 2026, including both direct providers and brokers, with mandatory annual renewals and fees.
For any financing under $1 million, sales-based financing providers must provide extensive disclosures covering everything from total financing amounts and disbursement details to payment schedules, additional fees, prepayment penalties, and even broker compensation arrangements. The operational restrictions go much deeper, voiding confession of judgment clauses entirely and requiring companies to obtain recipient signatures on all disclosures before finalizing any transaction.
Perhaps most problematic is the prohibition on automatic debiting of recipient accounts unless companies hold a “validly perfected first-priority security interest”—a legal standard that’s nearly impossible to meet in practice and effectively kills the streamlined payment processes that make revenue-based financing work for the funders, and by extension, the merchants.
The Finance Commission of Texas gains broad authority to identify and prohibit “unfair, deceptive, or abusive” practices, though interestingly, they cannot set maximum interest rates or fees. Violations carry steep civil penalties of $10,000 each, and the law applies to any provider offering services to Texas recipients via the Internet, regardless of where the company is physically located. These aren’t minor regulatory adjustments—they represent a complete overhaul that could drive legitimate capital providers out of the Texas market entirely.
This isn’t just bureaucratic red tape. It’s a fundamental misunderstanding of how modern business financing works. Revenue-based financing depends on streamlined payment processes tied to daily sales. Without this mechanism, the entire business model becomes unworkable.
If HB 700 becomes law, the consequences will ripple through Texas’s economy. Small businesses already struggling with inflation, labor shortages, and supply chain disruptions will lose access to flexible financing options. Rural businesses, minority-owned enterprises, and startups will be hit hardest—exactly the businesses Texas should be supporting.
The irony is stark. Texas has built its reputation as a business-friendly state, attracting companies fleeing overregulation in other states. HB 700 threatens to undermine that competitive advantage by making it harder for small businesses to access the capital they need to grow.
The voices of actual small business owners have been largely absent from this debate. Many don’t even know this legislation exists, despite its potential impact on their operations. Those who are aware express frustration that lawmakers are making decisions about their financing options without understanding their real-world needs.
Governor Abbott faces a clear choice. He can sign legislation that will likely drive responsible funders out of Texas, or he can recognize that small businesses need access to diverse financing options.
The goal should be protecting businesses from truly predatory practices while preserving their ability to access capital when traditional banks won’t help. That requires nuanced policy, not broad restrictions that treat all alternative finance providers as predators.
The battle against MCA regulation in Texas isn’t really about merchant cash advances—it’s about whether Texas will remain a place where small businesses can find the capital they need to thrive. Governor Abbott’s decision will determine not just the fate of HB 700, but the future of small business financing in Texas.
The countdown has begun. Texas small businesses are watching and waiting.
Tell Your Merchants to Act on The Texas Legislation
June 5, 2025Unbeknownst to many small businesses in Texas, revenue-based financing will be severely restricted in the state starting September 1, 2025 if the governor permits HB 700 to be finalized into law. For small businesses who might want to have a say on this matter, the Revenue Based Finance Coalition (RBFC) has provided information for merchants to conduct outreach to the appropriate parties. If you have merchants who want to weigh in before it’s too late, please share this link with them.
Govenor Abbott has between now and June 22nd to veto the legislation. If he signs or elects not to sign the bill by that date, the law will take effect on September 1, 2025.
Texas Passes Law Limiting Sales-Based Financing to 1st Positions Only (and more)
May 29, 2025The Texas House of Representatives has adopted the Senate’s controversial Commercial Sales-Based Financing amendment that prohibits a sales-based financing provider from automatically debiting any merchant in the state unless they are in a perfected 1st position. With the governor’s signature it will be law. As previously outlined, Texas had introduced its own commercial financing disclosure bill which included many extra requirements such as broker registration, state regulatory oversight, and now… a prohibition on any sales-based financing (with a particular aim at MCAs) where payments are debited that is not a true 1st position with a perfected security interest. It bears mentioning that 1st position here means 1st position out of any other claim altogether, not just other MCAs.
The passed bill, which is the Senate version on the right hand side of this document, includes the following language:
CERTAIN AUTOMATIC DEBITS PROHIBITED.
A provider or commercial sales-based financing broker may not establish a mechanism for automatically debiting a recipient’s deposit account unless the provider or broker holds a validly perfected security interest in the recipient’s account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons.
While the law specifies sales-based financing, broadly encompassing either a purchase transaction (MCA) or a loan where the payments ebb and flow with sales activity (revenue based finance loan), companies with a special bank relationship are exempt from the law. The exemption applies to: “a bank, out-of-state bank, bank holding company, credit union, federal credit union, out-of-state credit union, or any subsidiary or affiliate of those financial institutions.”
Though the House had until Monday to decide on adopting the Senate’s amendment, the 98 Yeas to the 23 Nays made it a done deal at the very end of yesterday’s legislative session. It now simply awaits the governor’s signature.
Texas Commercial Sales-Based Financing Bill Gets Last Minute ACH Ban Amendment
May 27, 2025The Commercial Sales-Based Financing bill that passed through the Texas House of Representatives two weeks ago has now also passed through the Senate, but with a rather controversial amendment. In the Senate version, passed yesterday, and viewable on the right hand side of this document, sales-based financing providers would not be allowed to automatically debit a merchant’s account unless they have a “validly perfected security interest in the recipient’s account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons.” That means any sales-based funding (like an MCA or revenue-based financing loan) would be prohibited from debiting merchants automatically unless they were in true first position. And not just a first position MCA, but first position on all arrangements the merchant has altogether. AND it would have to be perfected in accordance with this statute.
The Senate Amendment:
CERTAIN AUTOMATIC DEBITS PROHIBITED.
A provider or commercial sales-based financing broker may not establish a mechanism for automatically debiting a recipient’s deposit account unless the provider or broker holds a validly perfected security interest in the recipient’s account under Chapter 9, Business & Commerce Code, with a first priority against the claims of all other persons.
Since the main difference between what the Senate and House passed is that one sentence prohibiting automatic debits, they have until June 2nd to decide which version of the passed bill is final.
Sales-based financing is broad. While the term encompasses sales-based purchase transactions (MCAs), firms like Walmart and PayPal engage in loan-based sales-based financing. Both firms, for example, are registered sales-based financing providers in the state of Virginia.
The Texas Senate amendment language is new. It does not resemble anything passed in a state commercial financing disclosure law to date.
An estimated 10% of all sales-based financing in the US takes place with Texas-based businesses.
The Largest Sales-Based Financing Providers
May 27, 2025Who are some of the largest sales-based financing providers in the US? The following companies are repaid as a percentage of sales or revenue, in which the payment amount may increase or decrease according to the volume of sales made or revenue received by the recipient:
Sales-Based Financing Providers |
Square |
PayPal |
Amazon (via Parafin) |
Walmart (via Parafin) |
Shopify |
Intuit |
Stripe |
DoorDash (via Parafin) |
The State of Washington has also recently announced it will be offering sales-based financing through a Department of Commerce initiative.
Among those listed above, Square recently published a White Paper on the impact of its sales-based financing.
“Square Loans has opened credit to populations who traditionally have had less access to business loans. As of the third quarter of 2024, approximately 58% of Square Loan customers are women-owned businesses, compared to the industry average of 19%.38 And 15% of Square Loans go to Black/African-owned businesses compared to an industry average of 6.6%, while 14% of loans go to Hispanic/Latinx-owned businesses compared to the industry average of 11.3%.”