Key points
- Revenue-based financing is repaid as a fixed share of revenue until a set cap, such as 1.3 to 1.5 times the amount funded.
- The cap fixes the dollar cost; faster revenue growth repays it sooner and raises the effective APR.
- In the worked example, $100,000 with a 1.40 cap costs $40,000 at an estimated APR of 36% to 85%, depending on revenue.
- Platform products from Shopify, Stripe and PayPal use flat fees and minimum payments; some RBF sold to small businesses is legally an MCA.
- Ask what counts as revenue, what the minimums are and whether paying early reduces the cap.
A share of revenue until a cap
Lighter Capital describes its version plainly: you pay a fixed percentage of topline revenue until the total repayment cap is reached. It says its caps run from 1.3 to 1.5 times the funded amount, depending on the health and stage of the business, with terms typically around 3 years.
The cap is the price. Take $100,000 with a cap of 1.4 times and you will repay $140,000 in total, whether that takes 10 months or 24. What changes with your revenue is how fast you get there, not how much you pay.
New York's definition of sales-based financing covers this structure: a transaction repaid over time "as a percentage of sales or revenue," where the payment rises or falls with volume. For disclosure purposes, revenue-based financing sits in the same family as a merchant cash advance.
Where revenue-based financing shows up
SaaS and subscription lenders. Lighter Capital lends up to $10 million on the RBF model and calls it ideal for SaaS and subscription businesses with steady or growing revenue.
Payment platforms. Shopify, Stripe and PayPal all finance sellers who process sales through them and collect a share of those sales automatically:
- Shopify Capital says you pay back with a percentage of your store's daily sales, over a maximum term of 18 months with minimum payments, and that its U.S. loans are issued by WebBank.
- Stripe Capital charges one flat fee that it says never changes and collects a fixed percentage of daily sales, with a minimum amount due each payment period. Its U.S. loans are issued by Celtic Bank or Lead Bank, and YouLend provides its merchant cash advances.
- PayPal Working Capital charges a single fixed fee, collects a share of PayPal sales and requires at least 5% or 10% of the total repayment every 90 days. Loans run from $1,000 to $250,000, or up to $400,000 for repeat borrowers, and the lender is WebBank.
Deposit-based advances. In small business funding, the RBF label is also used for products that are legally MCAs. Bizcap, for example, says its revenue-based financing "is contractually a purchase of future receivables," collected through daily or weekly debits. Read the contract, not the product name.
How RBF differs from an MCA
| Feature | Classic RBF | Merchant cash advance |
|---|---|---|
| What is shared | Topline or platform revenue | Card receipts or bank deposits |
| How price is stated | Cap multiple or flat fee | Factor rate |
| Payment rhythm | Monthly share, or daily through a platform | Daily or weekly split or debit |
| Minimums | Common on platform products | Fixed debits, reconciled to sales |
| Term in the examples above | Up to 18 months at Shopify, about 3 years at Lighter | Set by each funder, usually in months |
| Legal form | A bank loan in the platform examples above | A purchase of future receivables |
Mathematically, a cap multiple and a factor rate do the same job. A cap of 1.40 times and a factor rate of 1.40 both mean $140,000 back on $100,000. The real differences are the share, the minimums, the term and whether the contract is a loan or a sale. For the MCA side of the comparison, see what is a merchant cash advance.
What revenue-based financing costs
Worked example. $100,000 with a repayment cap of 1.40 times ($140,000), repaid at 6% of monthly revenue. The dollar cost is $40,000 in every row.
| Monthly revenue | Monthly payment | Months to repay | Estimated APR |
|---|---|---|---|
| $100,000 | $6,000 | 24 (last payment $2,000) | 36% |
| $150,000 | $9,000 | 16 (last payment $5,000) | 53% |
| $250,000 | $15,000 | 10 (last payment $5,000) | 85% |
Estimated APR is the internal rate of return of the monthly cash flows, times 12. The share and cap here are example terms, not a quote.
This is the part of RBF that can surprise a growing business. The better your revenue does, the faster you repay and the higher the effective price per month. That is fine if the growth the money funded is worth more than the cost. It is a problem if you took the deal expecting a 3-year price and paid it off in 10 months.
Platform products state cost as a flat fee instead of a cap, and a flat fee works exactly like a cap. Stripe's own example shows a $15,000 loan with a $1,500 fee and 9% of sales going to repayment, so $16,500 comes back however fast sales repay it.
Worked example: the flat fee at 2 sales levels. $15,000 received, $16,500 repaid at 9% of sales, with sales settling on business days and ignoring minimum payments.
- $2,000 of sales per business day: $180 a day for 92 business days (last payment $120), about 4.4 months. Estimated APR about 53%.
- $1,000 of sales per business day: $90 a day for 184 business days (last payment $30), about 8.8 months. Estimated APR about 26%.
Sales levels are examples. Estimated APR is the daily internal rate of return times 252.
What RBF providers look at
SaaS-focused lenders price on the health and stage of the business: Lighter Capital says its cap depends on exactly that, and describes RBF as suited to steady or growing subscription revenue. Platform programs have an advantage no outside funder has: they can see your sales history on their own systems, and they collect directly from the sales they process. Deposit-based products sold as RBF generally underwrite much like an MCA, from recent bank statements.
Whichever type you use, keep your revenue flowing through the channel the provider collects from. Moving sales to another platform or account while a balance is open can be a breach of the agreement.
When it fits and when it does not
- Good fit: a subscription or SaaS company with predictable revenue, an e-commerce seller whose platform offers financing and collects it automatically, or a seasonal seller that wants payments to shrink in slow months.
- Poor fit: a business with thin margins, where 6% of revenue could be most of the profit; a long-term need such as real estate, which belongs in long-term debt; or a business that cannot meet platform minimums in a slow quarter.
Unlike selling equity, RBF leaves ownership untouched; the price is paid in cash from revenue instead. Compared with an MCA, the longer terms of SaaS-style RBF and the automatic collection of platform financing can make payments easier to carry.
Questions to ask about any RBF offer
- What percentage, and of which revenue: gross sales, sales net of refunds, card sales or all deposits?
- What is the cap multiple or flat fee, and the total dollar amount you will repay?
- Are there minimum payments, and what happens if sales do not cover them?
- Does paying early reduce the cap or fee, or is the full amount due regardless?
- Is it a loan, and from which lender, or a purchase of receivables?
- What counts as a default if revenue falls sharply or stops?
Enter any offer's advance, total repayment and payment schedule into the offer decoder to see its dollar cost and estimated APR.
Questions
Is revenue-based financing a loan?
It depends on the product. Platform programs such as Shopify Capital and PayPal Working Capital are loans issued by banks, while some small business products sold as RBF, such as Bizcap's, are contractually purchases of future receivables. The contract decides.
What is a repayment cap?
The total you agree to repay, stated as a multiple of the amount funded. A cap of 1.40 times on $100,000 means you repay $140,000 in total, however long your revenue takes to get there.
What happens if my revenue drops?
Your share-based payment falls with it, but minimums can still apply. PayPal Working Capital, for example, requires at least 5% or 10% of the total repayment every 90 days, and Stripe debits your bank account if sales do not cover the minimum for a period.
Does paying revenue-based financing off early save money?
Usually not, because the cap or flat fee is fixed. Stripe, for example, describes its fee as one flat fee that never changes. Ask whether any early payoff reduces the total before you sign.
Have an offer on the table?
Decode it before you sign, or let us bring back offers from funders that fit, each with its full cost.
Sources
- FAQ — Lighter Capital (checked 2026-09-30)
- Revenue-based financing (glossary) — Lighter Capital (checked 2026-09-30)
- Stripe Capital — Stripe (checked 2026-09-30)
- Shopify Capital — Shopify (checked 2026-09-30)
- Working Capital loan for businesses — PayPal (checked 2026-09-30)
- What is the minimum repayment requirement for my PayPal Working Capital loan? — PayPal (checked 2026-09-30)
- Revenue based financing — Bizcap (checked 2026-09-30)
- N.Y. Financial Services Law § 801, definitions including sales-based financing — New York State Senate (checked 2026-09-30)
This guide is general information, not legal, tax or financial advice. Figures are examples worked with the method in our disclosures.