How revenue-based financing works
With revenue-based financing, a funder provides capital today, and you pay it back as a fixed percentage of your revenue until an agreed total is reached. When sales are strong, you pay back faster. When sales slow, payments shrink.
A merchant cash advance is one common form of revenue-based financing. Some agreements collect a percentage of card sales; others use a fixed daily or weekly ACH amount that can be adjusted (a "reconciliation") if your revenue drops.
Pros and cons
Advantages
- Approval based mainly on revenue
- No collateral required
- Payments follow business performance
- Fast funding
Trade-offs
- Higher total cost than bank loans
- Frequent (daily or weekly) payments
- Shorter terms
- Early payoff may not reduce the cost — ask before signing
Who is it best for?
Revenue-based financing is a strong fit for businesses with steady or seasonal sales that need capital quickly — restaurants, retailers, e-commerce brands, service businesses and contractors — especially when a bank loan is too slow or not available.
Funding by industry
Restaurants · Trucking · Construction · Medical & Dental · Retail Stores · Auto Repair Shops · Salons & Spas · E-commerce · Landscaping · HVAC & Plumbing · Manufacturing · Wholesale & Distribution · Gyms & Fitness · Hotels & Hospitality