LendFriend
Get Funded

About

About LendFriendVision & RoadmapRisk Scoring
LendFriend
Start Your Raise

Loading...

© 2025 LendFriend. All rights reserved.

Privacy PolicyTerms of Service
Transparency Report

Business Health &
Affordability

We evaluate every application on two independent factors: the quality of the business and the safety of the loan.

Contents

Part 1: Health

Part 2: Safety

Part 3: Foundation

Our assessment process is divided into three parts to give lenders a complete picture without exposing sensitive merchant data.

  • 1
    Business HealthMeasures the quality and stability of the business (0-100 Score).
  • 2
    Loan SafetyChecks if the specific loan amount is affordable given current revenue.
  • 3
    Data FoundationExplains how we verify sources and protect privacy.
Part 1

Business Health Score

Measures the quality and stability of the business.

Example Calculation
The Metric

Business Health Score

Grade A (82/100)
Revenue Stability
85/100
Business Tenure
100/100
Growth Trend
72/100
Order Consistency
90/100

Score Components

35%
25%
20%
20%
Revenue StabilityOrder ConsistencyTenureGrowth

Detailed Methodology

Revenue Stability

Month-over-month consistency is the strongest predictor of repayment per FinRegLab research.

35%
Weight
CV = (σ / μ) × 100
Standard deviation (σ) of monthly revenue divided by mean (μ) monthly revenue. Lower CV indicates higher stability.
Thresholds
CV < 15%100 pts
CV 15-25%85 pts
CV 25-40%70 pts
CV 40-60%50 pts
CV 60-80%30 pts
CV > 80%15 pts
Min. data: 3+ months data

Order Consistency

Steady transaction patterns indicate reliable demand.

25%
Weight
CV = (σ / μ) × 100
Standard deviation (σ) of weekly order counts divided by mean (μ) weekly orders. Lower CV indicates reliable demand.
Thresholds
CV < 20%100 pts
CV 20-35%85 pts
CV 35-50%70 pts
CV 50-70%50 pts
CV 70-90%30 pts
CV > 90%15 pts
Min. data: 4+ weeks data

Business Tenure

Track record matters, but is weighted lower than cash flow.

20%
Weight
tenure = (today - firstOrderDate) / 30
Days since first verified transaction, converted to months.
Thresholds
36+ months100 pts
24-36 months85 pts
12-24 months70 pts
6-12 months50 pts
3-6 months30 pts
< 3 months15 pts
Min. data: First order date

Growth Trend

Sustainable growth (10-30%) scores highest.

20%
Weight
growth = ((recentRev - priorRev) / priorRev) × 100
Orders split at data midpoint. Compares total revenue in second half vs first half of available data.
Thresholds
+10% to +30%100 pts
+30% to +50%85 pts
0% to +10%75 pts
+50% or more60 pts
0% to -10%50 pts
Below -10%15-30 pts
Min. data: 45+ days data

Grade Output

A
75-100
Excellent Health
B
55-74
Good Fundamentals
C
40-54
Fair / Developing
D
0-39
Elevated Risk
Part 2

Loan Affordability Check

Measures whether this specific loan amount is appropriate for the business's revenue.

Example Calculation
The Metric

Loan Affordability

Comfortable (0.4x)
Loan Request
$5,000
Monthly Revenue
$12,500
0xCurrent: 0.4x2.0x+
ComfortableManageableStretchedHigh Burden

Loan-to-Revenue Ratio

Ensures the business isn't over-leveraging itself. This assessment assigns a risk tier separate from the quality score, allowing lenders to decide their own risk tolerance.

Safety Check
Weight
Ratio = Loan Amount ÷ Avg Monthly Revenue
We compare the requested principal against the verified average monthly revenue from the last 3 months.
Thresholds
Comfortable< 0.5x
Manageable0.5x - 1.0x
Stretched1.0x - 2.0x
High Burden> 2.0x
Min. data: 3 months revenue history

Tier Output

Comfortable
< 0.5x
Low burden
Manageable
0.5-1.0x
Moderate burden
Stretched
1.0-2.0x
Heavy burden
High Burden
> 2.0x
Over-leveraged
Part 3

Data Foundation

Verified Data Sources

S
Shopify
Orders, Revenue
S
Stripe
Charges, Payouts
S
Square
POS Transactions

Privacy Design

We calculate these scores server-side and only display the Grade and Tier to the public. Raw financial data (exact revenue dollars) is never exposed, protecting the merchant's competitive advantage.

Inclusive Design Philosophy

As an inclusive, mission-based fintech, we intentionally choose language and visuals that frame every business as being on a growth journey—not as passing or failing a test. Our terminology draws from research on inclusive fintech and alternative credit scoring.

Tier Labels

How we name score tiers to avoid judgment

Traditional systems use A/B/C/D letter grades, which carry school-grade associations where "D" implies failure. We evaluated several alternatives:

ScoreTraditionalJourney-BasedNumeric Tiers
75-100Grade AEstablishedTier 1
55-74Grade BGrowingTier 2
40-54Grade CBuildingTier 3
0-39Grade DEmergingTier 4

Our choice: Journey-based labels frame every tier as a stage in the business growth journey rather than a pass/fail judgment.

Color Systems

Accessible, non-judgmental color choices

Traditional "traffic light" colors (red/yellow/green) carry implicit judgment and are problematic for colorblind users (~8% of men). We evaluated alternatives:

Traffic light (traditional)
Neutral lowest tier (gray = needs data)
Single-hue gradient (no judgment)

Our choice: Gray for the lowest tier implies "needs more data" rather than "bad," removing the red "danger" signal.

Why This Matters

The case for inclusive credit language

Traditional credit systems exclude 1.4 billion unbanked adults globally—often labeling them as "high risk" simply because they lack data. Inclusive fintech research suggests:

  • •Focus on what they lack (data, history) rather than who they are
  • •Frame trajectory (developing, building) rather than current state
  • •Use opportunity language—"emerging" populations, not "risky" ones
  • •Accessibility—avoid red/green for colorblind users, always include text labels

Our goal is to help every business grow, not to gatekeep who "deserves" credit.

Check Your Business Health

Check Eligibility