Revenue-based financing (RBF) is a method for businesses to raise capital by exchanging an upfront sum of money; capital for a fixed percentage of their future gross revenues. The lender gives you the capital upfront that a percentage is deducted when the money comes in to your business in the future, for a given period of time. It is a non-dilutive form of financing, meaning founders do not give up equity / ownership control of their company. 

How It Works

Instead of fixed monthly loan payments with interest, repayments with RBF generally are terms and conditions of your loan agreement that can fluctuate with the business's sales performance (“in time”) or other term needs you and the lender agree to. 

 

• Upfront Capital infusion ( in the present”).A financing provider gives the business a lump sum of capital.

• Repayment Percentage: The borrowing business agrees to pay a set percentage (typically daily or weekly) of its ongoing gross revenue to the provider/ lender

• Payment Fluctuation In high-revenue months / weeks; times, payments are larger, when the total amount is repaid faster. In low-revenue months/ weeks; times, the payments are smaller, easing cash flow pressure and providing flexibility.

• Repayment Capital Payments continue until a predetermined total amount (usually a multiple of the initial investment.

• Usually No Personal Guarantee required RBF typically, usually is not an asset based or collateralized loan which means it does not require the businesses’ or the owner’s personal assets be pledge as collateral guarantee. 

 

Pros
Flexible payments adjust to your cash flow, ideal for seasonal businesses.
No equity dilution means founders retain full ownership and control.
Faster funding process compared to traditional bank loans or VC.
Easier to qualify for, as eligibility focuses on revenue history rather than credit scores or collateral.