What Is a Business Loan Fund Rate?
Fund rate is the fraction of leads that turn into funded loans. It is the single most honest metric in lending — and the one pre-qualification most directly moves.
The Formula
Fund rate = funded loans ÷ total leads
The key discipline is cohorting. Deals fund with a lag, so a same-week numerator over a same-week denominator understates fund rate. Measure the cohort of leads that entered in a defined window, then wait long enough for the typical time-to-fund to elapse before locking the number.
Benchmarks by Product
| Product | Low | Median | High |
|---|---|---|---|
| MCA / short-term | 3% | 5% | 8% |
| Equipment finance | 4% | 7% | 10% |
| Term loans | 3% | 6% | 9% |
| Lines of credit | 4% | 7% | 11% |
| SBA | 1% | 3% | 5% |
Pre-qualification on well-scoped criteria typically lifts each of these by 1.5–2.5×, because the funded numerator is roughly the same while the denominator shrinks.
The Three Levers That Actually Move Fund Rate
-
Source mix
Kill sources whose fund rate can't clear cost.
-
Pre-qualification
Shrink the denominator by removing DNQ leads pre-human.
-
Speed to first touch
Every minute of delay past 5 min drops contact rate ~5%.
These stack. A book that fixes source mix, adds a pre-qual layer, and cuts time-to-first- touch to under 5 minutes routinely triples fund rate in a quarter without changing products, prices, or reps.
Worked Example
A lender buys 1,000 leads at $35/lead. Current fund rate: 4%. Average commission per funded loan: $2,400. That's 40 funded loans, $96,000 gross commission, and $35,000 media cost — before rep salaries.
Add pre-qualification at $1.25 per screened lead. 400 leads DNQ and are removed. The 600 Qualified leads work at a 7% fund rate — 42 funded loans, $100,800 gross commission, $35,000 media cost + $1,250 pre-qual cost. Same funded volume, but reps worked 400 fewer files, freeing capacity to work another cohort.
Fund rate is now 7% on Qualified files, or 4.2% blended. The real story is what the reps did with the reclaimed hours.
Frequently Asked Questions
-
For MCA and short-term business lending, healthy fund rates from raw leads run 3–8%. Post-pre-qual, well-run books push 8–15%. SBA is materially lower given the doc burden.
-
No. Close rate measures wins over qualified opportunities. Fund rate measures funded loans over total leads. Fund rate is a funnel-level metric; close rate is a sales-team metric.
-
By removing the leads that would have failed underwriting anyway — before rep time is spent. The numerator (funded loans) is unchanged; the denominator (leads worked) shrinks.
-
Yes. Source-level fund rate is where the real spend decisions live. A source with a 2% fund rate at $30/lead is losing money; a source with 12% at $30 is a growth channel.
-
Quarterly at minimum. Fund rate drifts as product mix, source mix, and credit conditions change.