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Revenue-Based Financing (RBF): How It Works, Costs and On-chain RBF
Revenue-based financing (RBF) gives a business money now in exchange for a share of its future revenue. Repayments rise when sales are strong and fall when they are weak, until a pre-agreed total has been repaid. It sits between a bank loan and equity investment and is popular with startups and small businesses that have recurring revenue but do not want to give up ownership.
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How revenue-based financing works
- The provider analyses revenue data, often connected directly from bank accounts, payment processors or accounting software.
- It offers an advance sized according to revenue, together with a repayment cap: the total amount the business will repay, expressed as a multiple of the advance.
- The business repays a fixed percentage of revenue each month or each week.
- Repayments stop once the cap has been reached.
How RBF repayments are calculated
The cost of RBF is set by the repayment cap, not by an annual interest rate. Here is a simplified, hypothetical example:
- Advance: $100,000
- Repayment cap: 1.2x, so the business repays $120,000 in total
- Revenue share: 8% of monthly revenue
With monthly revenue of $100,000, the business pays $8,000 a month and finishes in 15 months. If revenue doubles, it repays faster and the effective annual cost rises. If revenue drops, it repays more slowly and the effective cost falls. Real terms vary widely between providers.
RBF vs loans vs equity
| RBF | Term loan | Equity | |
|---|---|---|---|
| Repayment | Share of revenue until cap | Fixed instalments | None |
| Ownership given up | No | No | Yes |
| Personal guarantee or collateral | Often not required | Often required | No |
| Best for | Recurring revenue, growth spending | Predictable cash flow | High-risk, high-growth bets |
Advantages and drawbacks
- Pros: no dilution, flexible repayments, fast decisions based on data rather than credit history.
- Cons: can be expensive if revenue grows quickly, requires steady revenue, and limited loan size relative to revenue.
On-chain revenue-based financing
RBF providers need capital to lend. On-chain credit pools let them borrow stablecoins from a global pool of lenders and use the funds to make RBF advances to their customers. Lenders earn a yield linked to the repayment performance of those businesses, while the fintech handles underwriting and collection. The model depends on transparent reporting of loan performance and on legal recourse if the fintech fails. Read more in our on-chain credit overview.
Frequently asked questions
It is a form of financing usually treated as debt or a purchase of future revenue, not equity. The provider gets no ownership stake.
Legally it depends on the contract and the country. Economically it works like a loan whose repayment speed follows revenue.
From the difference between the repayment cap and the amount advanced, sometimes plus fees.
It suits startups with recurring, predictable revenue, such as SaaS or e-commerce businesses. It does not suit companies without revenue.
This page is for educational purposes only and is not financial, investment or tax advice. Crypto assets are volatile; you can lose all of your money.