The pitch is elegant: no fixed payment, just a percentage of what you earn - busy months pay more, slow months pay less, the financing breathes with the business. Sometimes it's exactly right. But 'flexible' describes the schedule, not the price - and the price is where revenue-based deals earn their reputation, good and bad.
How the mechanics actually work
You receive an advance ($20K-$500K) and repay a fixed total (advance × factor rate, typically 1.15-1.45) via a daily or weekly holdback of 5-15% of revenue. The dual truth: slow months genuinely hurt less than a fixed note - and strong months repay so fast that your effective APR climbs precisely when you succeed. A 1.30 factor repaid in 7 strong months is ~90%+ APR-equivalent; the same deal limping across 16 months is ~45%. You are penalized for winning.
| $50K advance, 1.30 factor | Repayment pace | Effective APR-equivalent |
|---|---|---|
| Strong revenue | ~7 months | ~90%+ |
| As underwritten | ~11 months | ~60% |
| Slow stretch | ~16 months | ~45% |
Who it genuinely fits
- Credit-damaged but revenue-strong businesses buying a specific, profitable outcome
- Truly seasonal operations where fixed payments break the off-season
- Short, defined opportunities where speed beats price and the return is obvious
- As a one-time ladder rung - never as a rotating habit; renewals are how holdbacks become permanent
Run the holdback against your margins
A 10% revenue holdback is survivable at 35% gross margins and lethal at 12%. Before signing: worst realistic month × holdback % - can the business still buy inventory and make payroll after that draft? If not, the flexible product is inflexibly wrong for you.
60-Second Funding Check
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What do you need funding for?
Priced against every alternative
One Dealerun application shows revenue-based offers NEXT TO term, equipment and factoring options - total payback, side by side. If flexible is right, you'll take it with open eyes; if it's not, you'll see what beats it.
Compare before you commit
Every product tier, honest totals, two minutes.
FAQ
Is revenue-based financing the same as a merchant cash advance?+
Close cousins - MCAs technically purchase future card receivables while RBF draws on total revenue, and RBF tends toward weekly (vs. daily) remittance and slightly saner pricing. The math discipline is identical: know the factor, the holdback, and your effective cost at YOUR realistic pace.
Do slow months extend my term or reduce what I owe?+
Extend only. The total payback is fixed at signing - slow months just stretch the same debt longer. 'Pay as you earn' flexes the calendar, never the price.
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