Revenue-Based Financing
Capital repaid as a fixed percentage of monthly revenue rather than via a fixed amortization schedule. Sized to the company's actual cash conversion, not its forecast.
How it differs from a term loan
Revenue-based financing flexes with the top line. In strong months, repayments accelerate; in soft months, they slow. This protects the operating account during normal seasonal swings.
The trade-off is total cost. Repayment multiples typically range from 1.2x to 1.6x of the advance, and effective cost is a function of how quickly revenue retires the obligation.
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