Flexes with sales
Revenue-based financing
Revenue-based financing repays as a fixed percentage of monthly revenue rather than a fixed dollar amount. When sales fall, the payment falls with them. You pay more in strong months and less in weak ones, and the term extends or contracts accordingly. For seasonal businesses, that flexibility is often worth more than a lower headline rate.
- Amount
- $25,000 – $500,000 typical
- Payment
- % of monthly revenue
- Term
- Variable — depends on performance
- Total repayment
- Capped at an agreed multiple
- Decision
- Days
- Best for
- Seasonal or variable revenue
How it works
You receive a lump sum and agree to repay a fixed multiple of it — say 1.3x — by remitting a set percentage of monthly revenue until the cap is reached.
A strong month means a larger payment and a shorter term. A weak month means a smaller payment and a longer one. The total is capped either way.
That is the meaningful difference from a fixed daily debit. The risk of a bad month is shared rather than sitting entirely on you. It is the structure that behaves most sensibly for a business whose revenue genuinely swings — a seasonal retailer, a roofer, a business with a real off-season.
Who it fits — and who it doesn't
Good fit when
- Revenue varies materially by season or by month
- You would struggle with a fixed daily debit in your slow months
- You can accept a longer total term in exchange for flexibility
- Revenue is verifiable through a processor or accounting integration
Wrong tool when
- Steady, predictable revenue — a fixed structure will cost less
- You want a definite payoff date
- Very thin margins where any revenue share is difficult
- You need the money in 24 hours
The cost, plainly
Expressed as a repayment cap — a multiple of the amount advanced — plus the revenue share percentage. The effective annualised cost depends entirely on how fast you repay, which depends on your revenue. Strong performance means you finish sooner and the effective rate is higher; weak performance stretches the term and lowers the effective rate.
That is the inverse of most structures and it is worth sitting with. You are buying insurance against a bad month, and like all insurance, you pay for it when things go well.
Check whether there is a minimum monthly payment floor. A floor can undo most of the downside protection you are paying for.
Rates and terms are set by the funding partner and vary based on your business. Nothing here is an offer of credit.
Businesses that use it
Straight answers
How is this different from a merchant cash advance?
A true holdback merchant cash advance works similarly. But most of what is sold as a merchant cash advance today is a fixed daily ACH, which does not flex at all. Revenue-based financing is explicitly built to flex, with a defined share and cap. Ask which structure you are actually being offered.
What if my revenue goes to zero?
In a pure revenue-share structure, the payment goes to zero too and the term extends. That is the point. But check for a minimum payment floor — many agreements include one, and a floor removes much of the protection you are paying for.
How do they verify my revenue?
Usually through a read-only connection to your bank account, payment processor or accounting software. That transparency is what makes the structure work, and it is also why the underwriting is often faster than it looks.
Is there a fixed end date?
No, and that is deliberate. You repay until the agreed cap is met. Strong months finish it sooner. If you need a certain payoff date for planning, a fixed-term structure fits you better.