Capital Source Group, LLC

Revenue-based financing is often misread through margin.

That is the wrong starting point.

A revenue-based facility is repaid from the revenue stream itself, so the real underwriting question is whether that revenue is stable, repeatable, diversified, and predictable enough to support the payment.

A thin-margin company with recurring, dependable revenue may be a stronger fit than a high-margin company with lumpy revenue tied to a few large customers.

This Capital Source article explains the Revenue Durability Criterion and why revenue-based financing underwrites durability, not profit margin.

Read the full article:
https://capitalsourcegroup.com/2026/06/12/revenue-based-financing-underwriting/

A company can lose money last year and still qualify for asset-based lending.

Why? Asset-based lending is not underwritten against last year’s profit. It is underwritten against eligible collateral, clean controls, receivables, inventory, collection discipline, and the working-capital cycle that turns assets into cash.

The mistake many lenders make is reading the income statement as the final answer. For ABL, that can be the wrong page.

A loss-making company with strong receivables, controlled collections, clean dilution, and a measurable cycle may be more fundable than a profitable company with weak collateral controls.

Capital Source reads the collateral base, the controls, and the cycle behind the numbers.

Read the full article:
https://capitalsourcegroup.com/2026/06/11/asset-based-lending-fund-companies-losing-money/

A capital structure can look compliant on paper and still be working against the balance sheet.

Capital Source’s latest article closes the Balance Sheet Governance Series with the Balance Sheet Governance Test: a cycle-by-cycle standard for determining whether the full capital stack remains within the company’s Supportable Borrowing Base.

The test compares current combined outstanding advances across all instruments against the Harmony-Harm Threshold. Below the threshold, the stack is working with the balance sheet. Above it, the structure is eroding balance sheet capacity, even when each individual facility still appears compliant.

This is where many SMB capital stacks break down. The business has not borrowed more, but DIO extension, collateral value decline, revenue compression, RBF renewal cost, or ABL advance rate miscalibration can move the threshold below the combined advance.

The question is no longer just: “Do we qualify for this facility?”

The better question is: “Is the full stack still sustainable against the balance sheet?”

Read the full article from Capital Source:
https://capitalsourcegroup.com/2026/06/09/balance-sheet-governance-test/

A business can pass every lender test and still carry more combined debt than the balance sheet can support.

That is the borrowing base governance gap.

Each lender sees its own facility. The PO lender sees the purchase order advance. The ABL lender sees the borrowing base. The RBF provider sees the revenue advance. Each one may be right inside its own credit box.

But the business is running one capital structure, not three separate instruments.

The new Capital Source article explains why individual covenant compliance is different from full-stack sustainability, and why financially literate operators need an Integrated Borrowing Base Assessment before liquidity pressure appears on the balance sheet.

Read the full article:
https://capitalsourcegroup.com/2026/06/02/borrowing-base-governance-gap/