Understand this lender type
Revenue-based funders can structure repayment as a percentage of revenue, a capped multiple, fixed scheduled payments, or a blend. Some specialize in subscription businesses or digital merchants. Ask which entity supplies the funds and whether the agreement is debt, purchased receivables, or another legal structure.
How to assess the fit
Build a monthly model using the actual payment formula. Test lower sales, seasonal swings, refunds, and a strong growth period. Revenue is not profit, so compare payments with gross margin and the cash left after ordinary operating expenses. A business with predictable receipts can still have limited room for debt service.
Questions that deserve an answer
Check minimum payments, reconciliation rights, permitted deductions from revenue, reporting access, and any fixed maturity. Early repayment may not reduce the contractual amount. Account connections can be part of underwriting or ongoing monitoring, so inspect permissions and revocation consequences. This directory explains lender categories and does not represent a verified funding offer or relationship.
Your next-step checklist
- Exact contractual revenue definition
- Repayment formula and cap
- Minimums and reconciliation process
- Gross-margin and downside-payment forecast
Crack this combination.
Why is revenue alone insufficient to assess affordability?
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Sources & further reading
This file draws on the following references. Product availability and requirements must be confirmed with the provider.
Levr: revenue-based financingFTC: small business financing issues