Revenue-based financing (RBF) is an alternative form of funding that allows businesses to secure capital based on their future revenue projections rather than traditional credit scores or collateral. In this model, investors provide funds in exchange for a percentage of the business’s future revenue until a pre-agreed amount is repaid, typically a multiple of the original loan.

Unlike traditional loans or equity financing, RBF is repayment-driven by the business’s income, meaning monthly payments are tied directly to the company’s revenue. If the business experiences higher sales, repayments increase; if revenue drops, payments decrease, offering a level of flexibility that traditional financing options can’t match. This makes RBF an attractive option for companies with fluctuating revenue streams or those that prefer not to give up ownership equity.

Revenue-based financing is ideal for businesses with steady revenue growth but not enough assets or credit history to secure conventional loans. It allows companies to access capital without diluting ownership or taking on rigid debt terms. RBF is often used by startups, growing businesses, and those looking to scale, particularly in industries like software, e-commerce, and consumer products.