Revenue-Based Financing (RBF)
A non-dilutive funding model where a company repays capital as a fixed percentage of ongoing revenue rather than fixed loan payments.
Revenue-based financing provides upfront capital in exchange for a fixed percentage of future revenue until a predetermined total repayment cap is reached (commonly 1.3-2.0x the amount provided), rather than fixed monthly loan payments or an equity stake. Because repayment scales with actual revenue, it flexes down automatically during slower months rather than creating fixed debt-service pressure.
RBF is particularly well-suited to companies with predictable, recurring revenue and healthy margins — SaaS, subscription, and e-commerce businesses — where lenders can underwrite based on revenue predictability rather than requiring the growth-stage scale or credit profile traditional venture debt lenders expect.
A company raises $500,000 in RBF with a 1.5x repayment cap and agrees to remit 6% of monthly revenue until $750,000 total is repaid. In a $200,000 revenue month, the company pays $12,000; in a slower $100,000 month, it pays $6,000 — the obligation flexes with actual revenue.
Model the full effective cost of RBF (the total repayment multiple, not just the headline percentage) against a comparable venture debt or equity option before committing — the flexibility of revenue-linked payments comes at a real cost that's worth comparing directly against alternatives.
Is revenue-based financing dilutive?
No — it's structured as a capital advance repaid from future revenue, not an equity investment, so it doesn't dilute the cap table the way a new funding round would.
Related terms
Run the numbers yourself: dilution, SAFE conversion, and fund-returner calculators.