Analyzing revenue charts for RBF

Revenue-Based Financing (RBF): Non-Dilutive Capital for Growth

Key Takeaways: Revenue-Based Financing (RBF)

  • What is it? Funding repaid through a fixed percentage of future monthly revenue, not fixed payments.
  • Who qualifies? Businesses with consistent, predictable revenue streams (like SaaS, subscription models, or established eCommerce), often needing $10k+ monthly revenue and 6+ months operating history.
  • Why choose it? No equity dilution (you keep ownership!), flexible payments that scale with your income, and faster access to capital than traditional bank loans.
  • Key Benefit: Repayments align with your cash flow – pay less during slow months.
  • Khojie Advantage: We connect you with RBF providers offering competitive rates and transparent terms, often with quicker approvals than banks, helping you fuel growth without giving up equity.

Grow Without Giving Up Equity: What is Revenue-Based Financing?

Revenue-Based Financing (RBF) is a unique way to fund your business where you receive capital upfront and repay it over time through a small, fixed percentage of your monthly revenue. Think of it as a partnership: the funder invests in your future success, and their return is tied directly to how well you do.

Unlike traditional loans with fixed monthly payments that can strain cash flow during slow periods, RBF payments automatically adjust. If revenue dips, your payment decreases. If revenue surges, you pay back faster, but always as a manageable percentage.

Crucially, RBF is not equity financing. You retain full ownership and control of your company – no giving up shares or board seats.

RBF vs. Other Funding: Key Differences

FeatureRevenue-Based FinancingTerm LoanVenture Capital (Equity)
RepaymentPercentage of RevenueFixed Monthly PaymentsNo Direct Repayment (Exit Event)
Equity DilutionNoNoYes
CollateralUsually NoneOften RequiredNone
Approval SpeedFast (Days/Weeks)Slow (Weeks/Months)Very Slow (Months)

How Does the RBF Process Work?

Getting RBF funding is typically faster and simpler than traditional bank loans:

  1. Application: Provide details about your business, revenue history (often connecting bank accounts or payment processors), and funding needs. Khojie streamlines this application across multiple RBF providers.
  2. Receive Offers: Based on your revenue and growth potential, providers offer a capital advance amount and specify the total repayment amount (advance + flat fee, often expressed as a multiple like 1.1x to 1.5x) and the revenue share percentage (e.g., 2-10%).
  3. Funding: Once you accept an offer, funds are typically disbursed quickly, often within a few days to a week – much faster than the weeks or months bank loans can take.
  4. Repayment: Each month, the agreed-upon percentage of your collected revenue is automatically transferred to the RBF provider until the total repayment amount is met.

Example Repayment:

A SaaS company gets $150,000 with a 1.2x repayment cap ($180,000 total) and a 5% revenue share.

  • Month 1 Revenue: $80,000 → Repayment: $4,000 (5% of $80k)
  • Month 2 Revenue: $60,000 → Repayment: $3,000 (5% of $60k)
  • Month 3 Revenue: $100,000 → Repayment: $5,000 (5% of $100k)

...payments continue until the $180,000 total is reached.

Is Your Business a Good Fit for RBF?

RBF is particularly well-suited for businesses with:

  • Predictable Recurring Revenue: SaaS, subscription boxes, membership sites.
  • Strong Gross Margins: Healthy margins ensure enough profit remains after the revenue share.
  • Consistent Sales History: Typically need 6-12 months of stable or growing revenue (often $10k+/month minimum).
  • Growth Potential: Using the funds for scalable activities like marketing or inventory.
  • Limited Hard Assets: Businesses that may not qualify for traditional asset-backed loans.

If your revenue is highly volatile or project-based, other options like Invoice Financing might be more appropriate.

Revenue-Based Financing: The Good & The Bad

Advantages:

  • Keep Your Equity: Grow without giving up ownership or control.
  • Flexible Payments: Repayments align with your cash flow.
  • No Collateral Needed: Based on revenue performance.
  • Faster Funding: Quicker access to capital than banks.
  • Investor Alignment: Funder succeeds when you succeed.

Disadvantages:

  • Higher Total Cost: The flat fee (multiple) can be more expensive than a low-APR loan if repaid quickly.
  • Requires Consistent Revenue: Not ideal for highly unpredictable sales.
  • Revenue Share Impact: Reduces cash available from top-line revenue each month.
  • Potential Warrants: Some RBF deals include warrants (options to buy equity later), slightly blurring the lines.

Frequently Asked Questions

How is the repayment amount calculated?

It's based on a pre-agreed fixed percentage of your monthly gross revenue until a total repayment cap (usually 1.1x to 1.5x the funded amount) is reached.

What happens if my revenue drops to zero one month?

In most true RBF agreements, your payment would also drop to zero for that month, though the repayment period would extend. Always confirm this specific term.

Is RBF better than venture capital (VC)?

It depends. RBF is non-dilutive (you keep ownership) and offers faster funding but provides less capital than VC typically does. VC involves giving up equity but can offer larger sums and strategic guidance.

Can I get RBF if I already have other loans?

Possibly. RBF providers will assess your overall debt load, but RBF can sometimes be secured even if you have existing debt, unlike some traditional loans.

Fuel Your Growth Without Giving Up Equity?

Revenue-Based Financing offers a flexible, founder-friendly way to scale. See if it's the right fit for your business with Khojie.

Explore RBF Options Talk to an RBF Specialist