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Revenue-based financing RBF
Also called revenue share financing, revenue share advance, RBF.
Funding repaid as a fixed percentage of revenue until an agreed multiple of the amount advanced has been paid, with no fixed maturity and no equity given up.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
The structure sits between an advance and venture debt. A funder provides capital and takes a stated share of monthly revenue - commonly collected monthly rather than daily - until total payments reach a cap expressed as a multiple of the amount advanced. When the cap is reached, the obligation ends. There is no interest rate and no maturity date.
It is built for businesses with verifiable, recurring, digitally observable revenue: subscription software, ecommerce, app publishers, direct-to-consumer brands. Underwriting usually runs through direct connections to payment processors, ecommerce platforms and accounting systems rather than bank statements alone, and the funder monitors those connections for the life of the deal.
Compared with equity, nothing is diluted and the funder's return is capped. Compared with a merchant cash advance, collection is gentler, the data relationship is deeper, and the businesses are different - but the core arithmetic is the same: a fixed dollar cost, not an accruing one.
Where this one catches people
Because the return is a fixed multiple, growing quickly makes the money more expensive in annualised terms, not less. Hit the cap in twelve months instead of thirty and you have paid the same dollars in less than half the time. Slow growth is cheaper annualised and worse for cash flow. Unless the contract contains an explicit discount for early completion, there is no reward for repaying faster.
Worked through
Illustration. $200,000 advanced with a 1.4x cap - $280,000 total - collected at 7% of monthly revenue.
At $400,000 monthly revenue, collection is $28,000 a month and the cap is reached in ten months: $80,000 of cost over ten months. At $150,000 monthly revenue, collection is $10,500 a month and the cap is reached in about 27 months: the same $80,000 of cost over more than twice the time. Identical contract, roughly half the annualised cost, purely because the business grew more slowly.
Figures in the example are illustrative. They show the arithmetic, not a quote — what any one lender would charge is on that lender's page, where it is published at all.
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Revenue-based financing — common questions
What does revenue-based financing mean?
Funding repaid as a fixed percentage of revenue until an agreed multiple of the amount advanced has been paid, with no fixed maturity and no equity given up.
Where does revenue-based financing catch people out?
Because the return is a fixed multiple, growing quickly makes the money more expensive in annualised terms, not less. Hit the cap in twelve months instead of thirty and you have paid the same dollars in less than half the time. Slow growth is cheaper annualised and worse for cash flow. Unless the contract contains an explicit discount for early completion, there is no reward for repaying faster.
Is revenue-based financing the same as an interest rate?
Revenue-based financing is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does revenue-based financing apply to?
Merchant Cash Advance, Revenue-Based Financing.
Is there a worked example of revenue-based financing?
Yes, on this page, and it is labelled illustrative. It shows the arithmetic, not a quote from any lender.
What else should I read alongside revenue-based financing?
Factor rate, Merchant cash advance, Payment frequency, Percentage of receivables, Purchased amount.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.