Revenue-Based Financing
Revenue-based financing (RBF) provides capital in exchange for a percentage of future revenue. Repay from revenue, not equity dilution.
What Is Revenue-Based Financing? How RBF Works
How it works: Investor gives $500k, you repay 10% of monthly revenue until cap (typically 1.3-2x). No equity given up. No board seats. Repayment speed depends on your growth. Benefits: no dilution, flexible payments, faster than VC. Drawbacks: expensive (effective APR 15-40%), requires existing revenue. Best for: profitable SaaS, e-commerce, services businesses that do not want to raise equity.
Examples
A profitable e-commerce brand takes $500,000 in revenue-based financing and agrees to repay 10 percent of monthly revenue until it has paid back 1.5 times the amount, or $750,000. In a strong month it repays faster; in a slow month the payment shrinks with it, and no equity changes hands either way.