Ecommerce
Ad spend and inventory cycles.
Guide
Revenue-based financing: payments that move with revenue
Revenue-based financing (RBF) gives you capital in exchange for a percentage of future revenue until you have repaid a set multiple of the amount. It is marketed to growth businesses as a friendlier alternative to advances and equity. The friendliness is real; so is the cost.
How it works
- Amount: sized by the provider to your revenue.
- Repayment cap: a multiple of the amount, stated in the offer (a hypothetical 1.3× is used below).
- Revenue share: a percentage of monthly revenue, stated in the offer, remitted until the cap is reached.
- Term: not fixed; faster growth pays it off sooner.
The cost paradox
Because the cap is fixed but the term is not, growing faster makes RBF more expensive as an annualized rate (you pay the same dollars over fewer months). A hypothetical 1.3× cap repaid in 12 months is a very different APR from the same cap over 30 months. Some providers add a minimum term or a step-up in the cap over time, which changes the picture again. Ask for the cap, the share, any minimums or step-ups, and model three growth scenarios.
RBF vs. MCA vs. term loan
| Revenue-based financing | Merchant cash advance | Term loan | |
|---|---|---|---|
| Payment | % of monthly revenue | % of daily card sales or fixed daily ACH | Fixed monthly |
| Term | Variable, usually 6–36 months | Variable, usually 3–12 months | Fixed |
| Cost quoted as | Repayment cap (multiple) | Factor rate | APR |
| How to compare | Model the cap over three growth scenarios | Estimated APR via the calculator | Stated APR |
| Best for | Growth spend with predictable payback | Short, urgent gaps | Planned purchases |
Who it fits
- Subscription, ecommerce, and software businesses with recurring or predictable revenue.
- Owners who want to avoid giving up equity and can accept a moderate-to-high cost for flexibility.
- Uses with a fast payback: ad spend on proven products, inventory with known sell-through.
It does not fit lumpy, project-based revenue or businesses that need a long, fixed term.
What Fast Mula is and isn't. Fast Mula helps you compare business-funding structures and submit one inquiry. Nothing on this site is an offer, approval, guaranteed rate, or guaranteed timeline. Any funding depends on a provider's own review, and terms vary by state.
Common questions
Is revenue-based financing a loan?
Structures vary. Some are loans with revenue-linked payments; some are purchases of future revenue like an MCA. The legal form affects regulation and what happens if revenue falls. Read the agreement.
What happens if my revenue drops to zero?
In a true revenue-share structure, payments pause; in a loan structure with a minimum payment, they do not. This is the single most important term to confirm.
Related
MCA alternatives
Cheaper structures.
Factor rate calculator
Model the cap as a factor.
Glossary: revenue-based financing
The cap and the share, defined.
Gig workers & the self-employed
Making platform income legible.
See which options fit your numbers
Inquiries are not open yet. You can preview the three-minute questionnaire now, and use the calculator and comparisons freely.