Revenue-based financing built around business revenue.
Revenue-based financing (RBF) can provide a capital advance in exchange for a set amount of future business receivables. Rather than a fixed loan payment, repayment is often tied to your sales volume—when revenue is strong, payback may move faster; during slower periods, it may scale down.
RBF is frequently structured as a purchase of future receivables rather than a loan, and is often priced using a factor rate. TMK evaluates your real bank deposits—not a single credit score—to find the right structure.
What is revenue-based financing?
Revenue-based financing is a capital advance provided in exchange for a set amount of future business receivables. It is often structured as a purchase of receivables rather than a conventional loan, and may be priced using a factor rate—a simple multiplier that sets your total payback upfront.
Because repayment is often tied to your sales volume, it can be a better fit for businesses whose revenue rises and falls through the year, since payments may scale with how the business is actually performing.
How revenue-based financing works
You receive a capital advance now in exchange for a set amount of future receivables. The cost is often calculated using a factor rate rather than compounding interest, so you may know the total dollar payback before you take the funds.
Repayment typically happens through automated daily or weekly transfers. Because those transfers are often tied to your sales volume, they can move with your revenue—faster when business is strong, slower when it dips.
How exactly payments fluctuate varies by provider and contract. Some programs adjust payment size with daily card or bank volume; others use a fixed scheduled payment that may be reconciled periodically. The specific payment mechanics in any offer are disclosed in your agreement before you sign.
Revenue-based financing vs. other options
RBF vs. traditional business loan: a traditional loan uses fixed scheduled payments and an interest rate. RBF is often a purchase of receivables that may be priced with a factor rate, with repayment tied to sales volume.
RBF vs. working capital: Working capital is the purpose of the funding. RBF is one structure that can provide working capital—useful when revenue fluctuates.
RBF vs. line of credit: a line of credit lets you draw and reuse funds as needed. RBF provides a lump advance repaid through sales-tied payments.
Compare all business funding options or use the funding calculator to see how a factor rate translates into total cost.
What providers evaluate
Requirements vary by provider and product. Funders may consider:
Revenue
Monthly deposits and total revenue are usually the primary factors in revenue-based underwriting.
Growth and consistency
Deposit consistency and month-over-month trends matter, not just a single month's revenue.
Time in business
How long the business has been operating helps providers assess stability. Requirements vary by product.
Existing obligations
Open positions and current payment burden are reviewed to make sure new funding fits your cash flow.
Potential advantages
- Repayment can scale with your sales volume
- Total payback is often known upfront via the factor rate
- Often faster to review than a traditional bank loan
Important considerations
- Frequent payments can strain cash flow if revenue drops sharply
- Factor-rate pricing can be more expensive than some loans
- Stacking multiple advances increases risk—disclose all positions
Revenue-based financing FAQs
Is revenue-based financing a loan?
No. RBF is often structured as a purchase of future business receivables rather than a conventional loan. It may be priced using a factor rate, not compounding interest. The legal characterization is set out in your agreement.
How are payments calculated?
Repayment is tied to your sales volume through automated daily or weekly transfers. The exact mechanics—whether payments adjust continuously or are reconciled periodically—vary by provider and are disclosed in your agreement.
Does credit matter?
Credit is reviewed, but revenue and cash flow usually carry more weight in revenue-based underwriting. Imperfect credit does not automatically disqualify you. Eligibility varies by provider.
How does RBF differ from an MCA?
Revenue-based financing and merchant cash advances can share certain characteristics, but pricing, payment calculations, collection methods, legal structure, and contract terms vary by provider and product. The specific structure in any offer is disclosed before you sign.
Can revenue-based financing be paid off early?
Early payoff terms vary by provider. Some offer early payoff discounts; others do not. Any early payoff terms are disclosed in your agreement before you sign.
See what revenue funding your business qualifies for
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