Revenue-based financing (RBF) is a non-dilutive funding structure where capital is advanced in exchange for a percentage of future revenue, typically repaid over 6-24 months until a multiple of the original advance is reached. No equity given up, no traditional interest rate — instead, a single fee or multiple.
The structure. - Advance: $100K capital today. - Single fee: 6-12% of advance (the "factor"). - Repayment: 5-15% of monthly revenue auto-deducted. - Total payback: $106K-$112K depending on fee structure. - Term: continues until total payback reached (typically 6-18 months).
RBF vs MCA — both are revenue-share but structurally different. - MCA: legal classification "purchase of future receivables." Underwriting via bank statements. Factor rate (1.15-1.55) on lump sum. Daily/weekly ACH debits. - RBF: usually structured as commercial loan. Underwriting via platform sales data (Shopify, Stripe). Single fee (5-14%) on lump sum. Repayment as percentage of monthly revenue (not daily). - Effective cost: similar for equivalent capital, but RBF terms are usually shorter (6-12 months) so effective APR can be similar or higher.
Top RBF providers by vertical (2026). - SaaS: Capchase (ARR advance), Pipe (ARR marketplace), Founderpath (bootstrap-friendly), Re:cap (Europe). - E-commerce: Wayflyer (Tiger Global-backed), Clearco (DTC pioneer), Settle (AP+AR combo). - Processor-embedded: Stripe Capital, PayPal Working Capital, Shopify Capital, Toast Capital, Square Capital, Clover Capital, Amazon Lending. - Cross-industry: Liberis, Ampla.
When RBF beats MCA. - E-commerce / SaaS with platform data: Stripe Capital, Shopify Capital, Wayflyer underwrite via platform sales — no FICO check, no bank statements. - Scaling revenue: repayment as % of revenue naturally scales down in slow months. - No personal guarantee preferred: many RBF products have no PG on standard offers. - Founder-friendly terms: no equity dilution, no board observer rights.
When RBF beats traditional loans. - You're not bankable: traditional loans require 24+ months + strong credit. RBF underwrites via revenue data only. - Variable revenue: % of revenue repayment matches your cash flow vs fixed monthly loan payment. - Fast funding: 24-72 hours for established platform merchants.
When RBF is NOT right. - Capital need longer than 24 months: RBF terms are short; you'll be paying off the fee fast at high effective cost. - You qualify for SBA/bank: traditional financing always cheaper. - Stable, predictable expenses: fixed-payment loans simpler to budget.
The strategic insight. RBF is the modern evolution of MCA. Same fundamental structure (revenue-share repayment) but with better underwriting (platform data), cleaner contract terms (no COJ in most cases), and lower effective costs in many cases. Best for SaaS/e-commerce/processor-merchant businesses with strong platform data.
Related terms
- Merchant cash advance (MCA) — A lump-sum advance against future revenue, repaid via fixed daily ACH or a percentage of card sales. Legally a sale of future receivables, not a loan.
- Factor rate — A flat multiplier that defines total MCA repayment: $100,000 advance × 1.30 factor = $130,000 repaid. It is not an interest rate; it does not compound.
AI agents: this term is available as raw markdown at /llms/glossary/revenue-based-financing.