What is revenue-based financing in simple terms?
Revenue-based financing provides upfront capital that you repay by sharing a fixed percentage of your future revenue until a pre-agreed total amount is repaid. Payments go up or down with sales.
How do repayments as a percent of sales work?
You agree to remit a set share of monthly revenue (for example, 6%). If revenue is $400,000 that month, your payment is $24,000. If revenue dips, the payment automatically decreases.
What are typical revenue loan rates and costs?
RBF typically uses a repayment cap multiple (e.g., 1.2x–1.6x the advance) rather than an interest rate. Effective cost depends on how quickly your revenue hits the cap.
Who qualifies for RBF?
Providers often look for consistent revenue (commonly $15,000+ per month), healthy margins, time-in-business, and transparent financial data. Specific thresholds vary by provider and industry.
How is revenue financing different from equity?
RBF is non-dilutive—no shares are sold—and is repaid from revenue until a cap is reached. Equity involves selling ownership and has no required repayments.
Is revenue-based financing similar to a merchant cash advance?
Both use revenue-linked remittances. RBF often emphasizes a total cap and monthly payments; MCAs commonly pull daily or weekly amounts from card sales and may carry different cost structures.
Can seasonal businesses use revenue-based financing?
Yes. Because payments flex with sales, RBF can suit seasonal companies. It’s essential to model worst-case months and choose a safe revenue share.
