Revenue-based financing (RBF) gives a business an upfront sum of capital in exchange for a share of its future sales. Instead of a fixed interest rate and a monthly installment, you repay a set total through small daily or weekly payments, and approval rests on your revenue more than your credit score.
This guide covers how RBF works, what it costs, when it fits, how to apply, and how to manage the payments once you’re funded. SBG Funding is a direct provider of revenue-based financing, so the details below reflect how we structure it.
What Is Revenue-Based Financing?
Revenue-based financing is a purchase of a portion of your future sales. The provider pays you a lump sum today, and you pay back an agreed total from the revenue your business brings in. It is not a loan: there is no interest rate, and the amount you repay is fixed when you sign.
To size an offer, the provider reviews your recent bank statements to see your average monthly deposits and how steady they are. At SBG Funding, that means your four most recent business bank statements. We don’t run a hard credit pull.
Cost is set with a factor rate, a multiplier applied to the amount funded. A $50,000 advance at a 1.3 factor rate means you repay $65,000 in total, and that number doesn’t change. Payments come out daily or weekly until the total is paid.
Because payments track your revenue rather than a calendar, RBF suits businesses whose sales move with the seasons or the week. The trade-off is cost: compared with a term loan or a line of credit, RBF is usually the more expensive option, so it works best for needs with a clear, near-term return.
The Advantages of Revenue-Based Financing
RBF trades a higher cost for speed, flexibility and easier approval. Here’s what that looks like in practice.
Speed. Approval depends mostly on your bank statements, so decisions come quickly and funding can follow within a day or two of approval. That matters when an opportunity or an expense won’t wait.
Flexible use. RBF capital isn’t tied to a specific purchase. You can put it toward inventory, payroll, equipment repairs, marketing or a new hire.
Easier approval. Revenue counts for more than credit history. SBG Funding works with business owners with FICO scores from 500, at least six months in business and $150,000 or more in annual revenue.
No collateral. RBF from SBG Funding doesn’t require you to pledge property or equipment, which makes it an option for businesses that don’t own hard assets or don’t want to tie them up.
When Revenue-Based Financing Makes Sense
RBF is one tool among several, and the higher cost means it should be matched to the right need. It tends to fit in these situations:
- Urgent needs: A cash flow gap, an emergency repair or a time-limited opportunity where waiting weeks for a bank decision would cost more than the financing.
- Uneven revenue: Retail, restaurants and other seasonal businesses whose sales rise and fall, where small, frequent payments are easier to plan around than one large monthly bill.
- Limited collateral or credit history: Businesses with steady deposits but without the assets or credit scores a bank asks for.
- A purchase that pays for itself quickly: Inventory for a busy season, a marketing push with a measurable return, or equipment that adds capacity right away.
If your need is ongoing rather than one-time, a business line of credit may fit better. For a large, planned investment with a longer payoff, compare a term loan or SBA 7(a) financing.
How to Apply for Revenue-Based Financing
Applying is quick when you have your documents ready. Requirements differ between providers, so check each one’s criteria before you apply.
Here’s how the process works at SBG Funding:
- Check the requirements: At least six months in business, $150,000 or more in annual revenue and a FICO score of 500 or higher.
- Gather your bank statements: Have your four most recent business bank statements ready. They’re the main document behind the decision.
- Submit the application: The online application takes a few minutes and covers your business, your revenue and any financing you already have. There’s no hard credit pull.
- Review the offer: Look at the amount funded, the factor rate, the total repayment and the payment schedule. Work out what the daily or weekly payment means for your cash flow in a slow month, not only an average one.
- Sign and get funded: Once you accept the terms and sign the agreement, funds are sent to your business account, often within 24 hours.
Ready to see what you qualify for? Start your application.
Managing Revenue-Based Financing After You’re Funded
Frequent payments are easy to manage when you plan for them from day one. These habits help:
- Watch daily cash flow: Check your account balance against upcoming payments, especially in slower weeks, so a payment never comes as a surprise.
- Budget around the payment: Treat the daily or weekly amount as a fixed operating cost and keep a cushion for payroll, rent and suppliers.
- Measure the return: Track what the capital paid for and what it brought in. That tells you whether the next round of financing is worth it.
- Talk to your provider early: If revenue drops, call before a payment is missed. It’s much easier to adjust a schedule ahead of a problem than after one.
Avoid stacking several advances from different providers at once. Overlapping daily payments are the most common reason businesses run into trouble with this kind of financing.
Revenue-Based Financing With SBG Funding
SBG Funding is a direct provider of revenue-based financing and a marketplace offering a broad range of funding solutions through an extensive network of lenders. If RBF isn’t the right fit, we can compare it against the other options you qualify for.
We’ve funded more than 28,000 small businesses, with amounts from $5,000 to $10 million across all our products. Apply online in minutes; it won’t affect your credit score.
Have questions first? Contact our team or call 844-284-2725.