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What is Revenue Based Financing and How Does it Work?
Revenue-Based Financing (RBF) is a flexible funding solution where a business receives capital in exchange for a percentage of its future revenue. Rather than making fixed monthly payments like with traditional loans, repayments are tied directly to the company’s actual sales—allowing payment amounts to adjust based on performance.
This type of financing is especially beneficial for companies with fluctuating revenue or limited access to conventional funding options. Since payments scale with income, it creates a more adaptable and aligned relationship between the business and the funder—helping businesses grow without the pressure of rigid repayment schedules.
Revenue-based financing is often attractive to businesses with uneven revenue streams that may not have the assets or credit history to secure traditional loans or funding. It provides a more flexible and collaborative approach to financing, aligning the interests of the business and the purchaser.
Flexible
Scalable
Dependable
What Are the Advantages?
Repayment Structure
The business commits to sharing a fixed percentage of its monthly revenue with the funder, making payments proportional to income.
No Fixed Term
The agreement remains in place until the total agreed-upon amount has been fully repaid, with no set maturity date.
Equity-Free Capital
This type of funding allows businesses to access capital without giving up ownership or equity stakes.
Increased Risk for Funders
Since repayments depend entirely on the business’s revenue performance, funders assume greater risk compared to traditional lenders.
Minimum Requirements
Revenue-based financing can be highly beneficial for business owners seeking flexibility and performance-based funding.
- 6+ Months in business
- Fair/Good credit score
- $200k annual revenue
- U.S.-based business locations
FAQs
What can Revenue Based Financing be used for?
- Operations Improvements
- Technology Investments
- Strategic Acquisittion
- Business Expansion
What is Revenue Based Financing?
Revenue-based financing* offers small businesses capital by purchasing future receivables with a fixed percentage of their monthly gross revenues. Remittances of the percentage of receivables fluctuate based on the business’s monthly revenue, providing flexibility as their earnings fluctuate.
What are the pros and cons of Revenue Based Financing?
Pros
Flexible remittance schedule as revenues fluctuate
No repayment guarantee even if the business fails or files for bankruptcy
Capital for growth that is easy to obtain and has no fixed term of repayment
Cons
Remittances are typically daily or weekly and debited via ACH
Pricing will vary based primarily on the business risk profile
If the business’s revenue increases, then remittances may increase
How do I apply for Revenue Based Financing?
Apply directly on the CBF website
What do I need to know before I apply for Revenue Based Financing?
Minimum qualifications: a U.S.-based small business with a business bank account, a minimum of 6 months in business, and at least $8,000 a month in revenue; additional underwriting criteria will apply.
When should my business consider revenue-based financing as an alternative?
- If you are a small business with few fixed assets
- If you have immediate short-term capital needs and prefer the variable nature of remittances with this product
- If you own a business which is “project-based” and produces a fluctuating revenue stream
How Small Businesses Have Used Revenue-Based Financing
Entrepreneurs often use revenue-based financing to support key initiatives like expanding operations, launching marketing campaigns, purchasing inventory, or growing their teams. By offering a dynamic and performance-driven repayment model, revenue-based financing provides the financial agility businesses need to seize new opportunities and pursue long-term growth without compromising ownership or overextending their resources.