What is revenue-based financing?

Revenue-based financing (RBF) provides capital in exchange for a percentage of ongoing monthly revenues until a predetermined repayment cap is reached. Unlike MCAs which focus on card sales, RBF applies to total revenue and is common in software (SaaS) and e-commerce businesses. Repayment amounts flex with revenue — you pay more in strong months and less in slow months, providing cash flow protection. The repayment cap is typically 1.5x to 3x the amount borrowed. RBF does not require equity dilution like venture capital and does not require collateral. It is most suitable for businesses with predictable, recurring revenue and gross margins above 50%.