Why naive run rate misleads
Multiplying YTD ÷ months × 12 assumes flat performance and no seasonality. A swimming pool business with $400K through June will not earn $800K — most pools earn 70% of revenue in May–August. SaaS founders make the opposite mistake: they apply zero growth and under-project ARR.
What lenders actually use
Banks and SBA lenders use trailing 12 months (TTM) revenue, not annualized YTD. If you're applying for financing mid-year, expect to provide a full 12 months of actual data plus a projection methodology. The run-rate approach is for internal planning only.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
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Read the guideFAQ
How do I annualize quarterly revenue?
Quarterly × 4 is the simplest method, but it ignores seasonality. Use a 12-month rolling sum when you have the data, or project remaining quarters with growth assumptions.
What's the difference between annual revenue and ARR?
Annual revenue includes all income (recurring + one-time + services). ARR (Annual Recurring Revenue) includes only contracted, recurring subscription revenue — common in SaaS.
Do lenders accept annualized run-rate revenue?
Most banks and SBA lenders want trailing 12-month actuals, not annualized projections. Investors will sometimes accept TTM + projection if your growth story is credible and consistent.
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