How is revenue-based financing priced?

As a factor rate applied to the advance. A $50,000 advance at 1.3 means $65,000 total repayment. Convert that to an estimated APR using the expected payback period before comparing it with a loan.

Is this the same as a merchant cash advance?

They are closely related. A merchant cash advance is repaid from card settlements, while revenue-based financing is more often collected by fixed daily or weekly ACH tied to overall revenue. Both are priced with factor rates.

Does repaying early save money?

Usually not. The total repayment amount is fixed at signing, so paying early shortens the schedule without reducing the cost, unless the agreement includes a stated early-payoff discount.

Because remittances are a share of sales, a slow period reduces each payment and extends the payback. The total amount owed stays the same, so the relief is in timing rather than in cost.

Funding solution

Revenue-Based Financing for Growing Businesses

Revenue-based financing advances a lump sum that you repay as an agreed percentage of ongoing sales, so remittances move with your revenue instead of a fixed instalment. Cost is expressed as a factor rate. BusinessLending360 is not a lender — we match your request with options from 1,700+ funding sources.

Typical range: $10,000 – $500,000

How revenue-based financing works

A provider advances a lump sum and, in exchange, takes an agreed percentage of your future sales until a fixed total repayment amount is delivered. Remittances are usually collected daily or weekly by ACH from your business bank account, or as a split of card settlements.

Cost is quoted as a factor rate rather than an interest rate. A $50,000 advance at a 1.25 factor means $62,500 is repaid in total. Because there is no amortisation, repaying early generally does not reduce the total owed unless the agreement includes an explicit early-payoff discount.

Underwriting is fast and cash-flow driven. Providers review three to six months of bank or processor statements and focus on deposit volume, consistency and existing obligations, so decisions frequently come the same day and funding within one to two business days.

The structure is flexible in timing rather than in total price: a slow week means a smaller remittance and a longer payback, but the total repayment amount does not change. That is the trade-off to weigh against a term loan.

Rates and costs

Revenue-based financing and merchant cash advances are the most expensive mainstream options on this site. Factor rates commonly range from roughly 1.15 to 1.5 of the advance, which on a short payback translates into a high effective annualised cost even though no interest rate is quoted.

Always ask the provider to state the total repayment amount, the remittance percentage, the expected payback period and any origination or ACH fees, then convert that to an estimated APR before comparing with a term loan or a line of credit. Stacking a second advance on top of an existing one is the most common route into a cash-flow crisis.

Revenue-based financing is priced as a factor rate, not an APR, and the effective annualised cost is typically higher than a term loan. Pricing is set by each funding provider and varies by revenue, industry and payback period.

Amounts and terms

Typical amount: $10,000 – $500,000
Cost basis: Factor rate (e.g. 1.15 – 1.5), not an APR
Payback period: 3 – 18 months, varying with sales
Repayment: Daily or weekly share of sales or deposits
Typical funding speed: Same day to 2 business days
Collateral: Future receipts; personal guarantee of performance common

How to qualify

At least 3 months in business for most providers.
Roughly $10,000+ in monthly revenue with consistent deposits.
A US business bank account with a stable transaction history.
Credit profiles from about 500 are considered on some programs.
Limited or no existing advances outstanding.

Pros and cons

Among the fastest funding available — often within a day.
Remittances fall automatically when sales slow.
Accessible to profiles that term lenders decline.
No fixed monthly instalment to schedule.

The highest effective cost of the products listed on this site.
Daily or weekly debits can strain an already tight account.
Early repayment usually does not reduce the total owed.
Taking a second advance on top of the first compounds the pressure.

Common use cases

Retail or restaurant businesses with strong card volume
Filling a purchase order that must be funded before delivery
Bridging a short, well-defined gap with a clear payback
Covering an urgent repair when speed outweighs cost

Alternatives to consider

Related guide: read the full breakdown.

Frequently asked questions

How is revenue-based financing priced?: As a factor rate applied to the advance. A $50,000 advance at 1.3 means $65,000 total repayment. Convert that to an estimated APR using the expected payback period before comparing it with a loan.
Is this the same as a merchant cash advance?: They are closely related. A merchant cash advance is repaid from card settlements, while revenue-based financing is more often collected by fixed daily or weekly ACH tied to overall revenue. Both are priced with factor rates.
Does repaying early save money?: Usually not. The total repayment amount is fixed at signing, so paying early shortens the schedule without reducing the cost, unless the agreement includes a stated early-payoff discount.
What if sales drop?: Because remittances are a share of sales, a slow period reduces each payment and extends the payback. The total amount owed stays the same, so the relief is in timing rather than in cost.

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