Quick answer
Revenue-based finance provides a lump sum that's repaid as an agreed share of your future sales, usually taken automatically from card settlements, platform payouts or your bank account. Repayments rise in strong months and fall in quiet ones. It's assessed mostly on sales data, making it popular with online stores, subscription businesses and other card-heavy models.
Key points
- Repayments are a share of sales, so they flex with your revenue.
- Assessment relies on payment-platform, marketplace or bank data.
- There's usually a fixed total repayment amount agreed upfront.
- Fast repayment in strong months can make the effective cost higher than it looks.
- Repayment
- Share of sales
- Data used
- Payment, platform and bank data
- Best for
- Online, subscription, card-heavy
- Security
- Usually unsecured
Fixed repayments are a problem for businesses whose revenue moves. An online store might take three times as much in November as in February. A subscription business might be growing steadily but losing cash each month while it acquires customers. Revenue-based finance tries to fix the mismatch by tying repayments to sales: pay more when money is flowing, less when it isn’t.
It’s a genuinely digital product. Most providers assess and collect through data connections to your payment processor, marketplace account or bank, which is why it’s grown alongside e-commerce and software businesses.
How do revenue-linked repayments work?
The basic structure:
- You receive an advance — say $60,000 (illustrative).
- You agree on a total repayment amount upfront, being the advance plus a fixed fee.
- A set share of your daily or weekly sales is collected until the total is repaid.
If a strong month brings in more sales, more is repaid and the advance is cleared sooner. In a quiet month, less is collected. There’s no interest rate in the traditional sense — the cost is the fixed fee — but the time taken to repay changes the effective annual cost.
Which businesses suit revenue-based finance?
| Business type | Why it can fit |
|---|---|
| Online stores | Card and checkout data is clean and verifiable |
| Marketplace sellers | Regular platform payouts give a reliable trail |
| Subscription and SaaS | Recurring revenue is predictable |
| Hospitality and retail with POS | Card settlements are daily and consistent |
It’s less suited to businesses paid on invoice by other businesses — invoice finance usually matches that better — and to project-based income where months can pass with no sales at all.
What’s the true cost of revenue-based finance?
This is where people get caught out. Because the fee is fixed, repaying faster makes the effective cost higher on an annualised basis. A fee that looks modest over twelve months is much more expensive if strong trading clears the advance in four.
Before signing, ask for:
- the total amount you’ll repay in dollars
- the share of sales collected and how often
- any minimum repayment or maximum term
- what happens if you switch payment processors or close a sales channel
- whether early repayment reduces the fee
We don’t publish rates, and with revenue-based finance a headline figure would be misleading anyway. What matters is the dollar cost against what the funds will earn you. If you’re funding stock or ads, model the return first — our page on funding ad spend and growth shows how.
What data will the provider ask to see?
Expect requests to connect one or more of:
- your payment processor or checkout platform
- marketplace seller accounts
- your business bank account (read-only)
- accounting software
Providers look at sales volume, growth, refund and chargeback levels, customer concentration and seasonality. High refunds or chargebacks are a red flag, as is heavy reliance on a single channel that could switch off. Our explainer on open banking and CDR covers how bank-data consent works and how to withdraw it.
Revenue-based finance or a line of credit?
Both flex with your cycle, in different ways. With revenue-based finance, you get a lump sum and repayments follow sales automatically. With a business line of credit, you draw and repay when you choose and pay for what’s drawn. If you want automatic smoothing and have strong platform data, revenue-based can be simpler. If you want control and a facility that sits ready for repeated use, a line of credit usually wins on flexibility. A specialist can compare both for your numbers — start your online enquiry here.
What does an illustrative repayment look like?
Suppose an online store receives a $60,000 advance with a fixed total repayment agreed upfront, and a set share of daily sales is collected. In a strong month the collected amount is higher; in a quiet month it’s lower. The table below shows how the same advance can be repaid at different speeds depending on trading (all figures illustrative).
| Trading pattern | Time to repay | Effect on effective cost |
|---|---|---|
| Sales well above forecast | Shorter | Fixed fee spread over fewer months — higher annualised cost |
| Sales in line with forecast | As expected | As modelled |
| Sales below forecast | Longer | Lower annualised cost, but a longer commitment |
The point isn’t the numbers — it’s that the total dollar cost stays the same while the time changes. Judge it against the profit the funds generate, not a percentage.
Who shouldn’t use revenue-based finance?
If margins are thin, refunds are high, or most sales come from one channel that could change its rules overnight, revenue-linked repayments can bite harder than expected. The same is true if you’re funding something with a slow or uncertain payback. In those cases, a smaller facility, a line of credit, or simply waiting until margins improve may serve the business better.
What should you check in the agreement?
Look for how the sales share is calculated (gross or net of refunds), which accounts are swept, whether there is a personal guarantee, and what counts as a default — for example, moving sales to a new processor without telling the provider.
Ready to fund growth that follows your sales?
If your revenue arrives through cards, checkouts or platforms and you’d like repayments that move with it, it’s worth exploring. Send a 60-second enquiry and a lending specialist will talk you through realistic options. Enquiring doesn’t involve a credit check, your details aren’t distributed to a long list of providers, and accurate answers about your monthly sales and channels let us recommend the right structure first time.
Frequently asked questions
Is revenue-based finance a loan?
It works like one for most practical purposes: you receive funds and repay a set total over time. Some providers structure it as a purchase of future receivables. Read the agreement to understand the obligations, including any personal guarantee.
What happens if my sales drop?
Repayments fall in line with sales, which eases pressure. Many agreements still include a minimum repayment or a maximum term, so check what applies if sales fall sharply.
How is the cost calculated?
Usually as a fixed fee or multiple on the amount advanced, agreed upfront. Because the time to repay depends on sales, the effective cost per year varies. Ask for the total dollar cost and a realistic repayment timeline.
Do I need to connect my payment platform?
Most providers ask to connect your payment processor, marketplace account or bank, both to assess you and to collect repayments. Read-only data access and repayment collection are separate permissions.