Revenue-Based Financing

Revenue-based financing is an advance of capital repaid as a percentage of future revenue rather than through fixed installments. The funder and the business agree on three things: the advance amount, the share of revenue dedicated to repayment, and the total payback amount (the advance multiplied by a factor rate).

Because repayment is a share of revenue, the schedule flexes automatically. There is no maturity date pressure in the traditional sense and no interest charged. This is not a loan. All funding is subject to approval and underwriting.

You will see three labels used almost interchangeably, and it helps to know what each one emphasizes. A revenue advance stresses the lump sum: capital advanced today against revenue you have not earned yet. Sales-based financing stresses the repayment mechanic: payments calculated from actual sales.

A merchant cash advance is the industry-standard version of the same structure, usually with daily or weekly repayment. In practice, all three describe capital now for a share of future revenue at a factor-rate price. The label matters less than the four numbers in your offer: advance amount, factor rate, total payback, and repayment share.

Repayment is collected as an agreed percentage of revenue, either through a split of daily card sales at the processor level or through debits calibrated to your deposit pattern. When revenue climbs, the dollar amount collected climbs with it and the balance retires faster. When revenue softens, collections shrink automatically.

This self-adjusting quality is the main reason businesses choose revenue-based financing over fixed-payment products. You are never asked to produce a payment the business did not earn, which keeps cash-flow crunches from turning into defaults.

The price is a factor rate, exactly like any MCA: advance amount multiplied by the factor rate equals your total payback, fixed on day one. A $60,000 advance at a 1.25 factor rate means $75,000 total payback, collected gradually as a share of revenue.

Our factor rates start at 1.20, with stronger and more predictable revenue earning better rates. Because the timeline flexes with revenue, focus on the total payback number when comparing offers: it is the true cost regardless of how many weeks repayment takes.

Revenue-based financing fits businesses with demonstrable, recurring revenue: at least 1 year in business, $50,000 or more in average monthly revenue, and bank statements showing consistent deposits. Subscription businesses, e-commerce sellers, restaurants, and service companies with repeat customers are classic fits.

Credit is reviewed but is not the centerpiece of the decision. What underwriting wants to see is revenue it can measure and a pattern it can trust, because the repayment share is drawn directly from that revenue.

It fits when your revenue is real but uneven: seasonal businesses, project-based companies between invoices, or growing businesses reinvesting every dollar. It also fits growth spending where the return outpaces the factor-rate cost, such as inventory, equipment, or a marketing push with measurable returns.

It does not fit businesses with declining revenue and no plan to reverse it, because a shrinking revenue base stretches repayment indefinitely. It is also not the tool for multi-year projects: revenue-based terms are measured in months, so match the funding to a use that pays back on a similar horizon.