What Is Revenue-Based Financing?
Revenue-based financing (RBF) is a modern type of business funding where a company receives capital upfront and repays it as a fixed percentage of future revenues. Instead of fixed monthly installments, repayments adjust automatically to how the business performs: higher sales - faster repayment; lower sales - slower repayment.
This makes RBF a flexible, cash-flow-friendly alternative to traditional loans, especially for e-commerce, retail, and other businesses with fluctuating income.
How Revenue-Based Financing Works
RBF follows a simple structure:
- A business receives an advance - a lump-sum amount based on its revenue, cash flow, and performance.
- A repayment rate is set - usually a small percentage of daily or weekly revenue.
- Repayments happen automatically through the merchant’s PSP, POS terminal, or bank account.
- Repayment continues until a pre-agreed total amount (the “payback cap”) is reached.
- One time flat fee - no interest fees, no collateral, and no fixed schedule.
This approach gives SMEs predictable access to working capital without the pressure of fixed payments.
Key Features of RBF
Flexible Repayment
Repayments rise and fall with actual sales.
Businesses are not penalized during slower periods.
Fast Approval
Because decisions are based on real revenue data, underwriting can be automated and quick.
No Equity Dilution
Unlike many other financing solutions, RBF does not require giving up ownership.
No Traditional Collateral
Approval focuses on performance, not assets or personal guarantees.
How RBF Differs from Traditional Loans
| Revenue-Based Financing | Traditional Business Loans | |
|---|---|---|
| Repayment | % of revenue, adjusts with sales | Fixed instalments every month |
| Speed | Fast, data-driven | Slow, manual underwriting |
| Collateral | Not required | Often required |
| Interest | No interest (fixed payback cap instead) | Interest + fees |
| Best for | E-commerce, retail, variable-revenue SMEs | Mature businesses with predictable income |
What RBF Is Used For
Merchants typically use RBF to:
- Purchase inventory
- Scale marketing and advertising
- Prepare for seasonal peaks
- Launch new product lines
- Manage cash flow gaps
- Support growth and expansion
Because repayment follows revenue, capital can be used immediately without risk of cash-flow strain.
Who RBF Is Most Suitable For
RBF works best for businesses that:
- Have regular sales volume (even if seasonal)
- Receive payments through PSPs, POS systems, or online gateways
- Need fast, flexible financing
- Want to avoid collateral or equity dilution
This includes e-commerce brands, online retailers, cafés, restaurants, and local retail shops.
How Softloans Uses RBF
Softloans provides revenue-based financing through embedded partnerships with PSPs, marketplaces, financial platforms and other partners. This means:
- Merchants apply inside the platform they already use
- Offers are generated quickly
- Repayments are collected seamlessly through existing payment flows
Softloans’ technology evaluates real business performance using bank statement analytics, PSP transaction data, and cash-flow indicators to provide fair, transparent, and timely funding.