Revenue-Based Financing
Definition
Funding repaid as a fixed percentage of future revenue until a set total is reached, so payments rise and fall with sales.
Want a deeper explanation?
Revenue-based financing is popular with e-commerce brands because it is fast and does not require giving up equity.
The true cost depends on how fast you repay: faster repayment means a higher effective rate. Watch for: using it to fund marketing that has not yet proven a profitable payback.
Example
You receive $150,000 and repay 8% of monthly revenue until $172,500 has been paid back.