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What does this cost?
RocketOption is 100% free for founders. You pay nothing for the service, there are no commitments when you complete a pre-qualification app, and your terms with the lenders are not impacted by finding them through us.
Sounds too good to be true right? It’s actually a pretty common model used in a lot industries where one company refers someone to a partner company.
We partner with lenders who want us to help them increase their deal flow with qualified borrowers. After you move forward with one of the lender options we provide for you, they will pay us a fee for sending you to them.
The goal of RocketOption is to make it as easy as possible for founders to secure growth financing. We value our lender partners – their fees fund the operation that makes our mission possible for you.
What are the qualifications?
The qualifications will vary per lender but, generally, they are all looking for businesses that show year over year revenue growth, customer churn that is less than about 5% per year and gross margins of 50% or greater [Here’s how to calculate gross margin].
Some of the lenders have minimum revenue qualifications as low as $10k – $15k per month. Others will want to see no less than $2 million per year.
Currently, lending options are limited to startups in the United States, United Kingdom, Canada, and Australia. Contact Us if your company is headquartered somewhere else.
If your company fits somewhere in the middle of those qualifications, fill out the [Pre-Qualification Form] and we’ll send you your options. -The form is fast, there are no commitments, and it will only take a couple of minutes.
What types of loans are offered?
There is a growing variety of loan types available to startup founders now and we provide access to all of them. Fixed-term loans and lines of credit are probably the most well known. Revenue-based financing loans are the newest debt products out there.
RocketOption is not a lender itself – we don’t lend money – we help you find the best lender and loan option for your goals and business stage. Our lender partners provide the loan products and lend from their funds.
After you complete a pre-qualification app, we’ll compare it against our lender partner’s underwriting guidelines and send you the options you qualify for.
What are the financing terms?
The terms of the loans vary from lender to lender and are based on the type of loan offered and your business profile.
Your pre-qualification app will show which lenders are the best fit for your company. The lender you choose will then take a closer look at how your business is performing. They’ll offer rates and terms that correspond to your ability to repay the loan.
Generally speaking, fixed term loans are repaid over 3 – 5 years and have a fixed interest rate.
Revenue-based financing products are paid back as a percentage of your revenue and use a multiple of your revenue to determine how much the loan will cost. The nice thing about these types of loans is that your business growth is able to determine how fast you pay it back. When your sales are growing faster, the loan is paid back faster. When sales are lower, your payments are lower. Lots of flexibility here.
Here’s our commitment – whichever lender you choose and whatever loan type you’re offered, we’ll be here to make sure you understand all the terms and feel confident picking the options the make the most sense for your growth goals.
How do I calculate Cost Of Goods Sold (COGS)?
Cost Of Goods Sold (COGS) is pretty simple to understand – it’s the total costs it takes your company to support the product it sells. An easy way to think about it is, if you removed one of these supporting teams or systems from your company, the product would mostly unusable and customers would not be able to get help when they need it.
For SaaS businesses here are the types of things you’ll typically include:
- Server/system hosting environment costs.
- Employee costs associated with keeping the product running. Think Dev/Ops and infrastructure teams, usually not product dev teams.
- Employee costs for customer support. Account managers, customer service reps, etc, not inside sales or the costs of employees selling upgrades.
- Cost of any third-party applications or systems that your product depends on to function.
- Any other employee costs directly associated with providing the ongoing service.
- Anything associated with sales – sales teams, commissions, marketing, etc
- Product/software development costs – the teams that create the product.
- General and administrative costs of the business. If it’s not directly tied to keeping the product running or helping a customer use it, don’t include the cost in COGS.
What if I can't find the tv remote?
- Find your phone and turn on the light.
- If your tv is mounted on a wall, very carefully pull the tv away from the wall just enough to shine your phone light behind the tv. Be careful – if you pull it too far, it may disconnect from the mount and fall. That would be bad.
- Flatten the side of your face to the wall next to the tv and strain with the eye closest to the wall to see behind the tv. Look for a button near the side. There may be a few buttons. Press them all one at a time. One of them is bound to turn the tv on. The others will help you navigate around the tv menu to adjust the volume, change the input source, or change the channel. Good luck figuring out which button does which.
- If your tv is not mounted on the wall, just slide it around and look behind it for those buttons mentioned above.
- No buttons? Tear the room apart looking for the remote again. Blame everyone else for losing it. They never put things back where they’re supposed to go! So irritating.
- Time to buy a new tv online. After it arrives the remote will magically appear in one of the places you’ve already looked.
What happens after I pre-qualify?
After you have completed the quick pre-qualification app you’ll be looking at the lender options you qualify for within 48 hours. That’s approximately 43 days faster than the average time it takes a founder to reach this point going through lenders and qualifying individually.
So, first off, congrats – you’re way ahead of the process!
The next steps happen with the lender you choose – we’ll introduce you.
They’ll want to go into more detail about your business with you. Be prepared to show things like financial statements, bank statements, and customer contracts. They want to understand how your business is performing, what your growth goals are, and how their capital is going to help you grow even faster.
For many of the lenders, the longest part of the process is simply getting copies of the supporting documentation from the founder (you). They will move as fast as you can. If you’re able to turn around documents quickly and help them understand your business fast, all of them are able to get to closing and fund your bank account rapidly.
The next step? You grow faster with cash in the bank and reflect back on all the time you saved by starting with RocketOption. 😉
There is an exception to the lender process mentioned above.
Some of the revenue-based financing lenders we partner with can offer very fast access to extra cash by simply connecting your bookkeeping software (Quickbooks, etc) and billing software (Stripe, etc) to their systems. They’ll use an algorithm to make their approval decisions and you could have cash in your bank account the same day.
These lenders can be great options if you’re looking for short term cash and some cushion in your account to help with seasonal cost fluctuations, unexpected events, or for turning MRR into ARR.
The other lenders described further above do take a process that is a little longer, but they are great partners if you’re looking for growth capital to fund larger investments like making new hires, investing in product development, or rolling out an aggressive marketing plan. Their loan amount offers also tend to be much larger since they’re helping with strategic growth vs simple cashflow flexibility.
There isn’t a good or bad option here – they’re just options. When you pre-qualify with the form below we’ll send your options and help you figure out which lender type may be the best fit for you.