3 Types of Revenue Based Financing That Can Solve Your Financial Needs


Revenue based financing is a method that allows companies to borrow funds now and pay back over time based on their future revenue. That is, you’ll receive money now you can use to meet your financial goals. In return, you agree to pay a portion of your sales over a period of time to the lender to recoup what you borrowed plus any additional fees.

Why the Revenue Sharing Method Works Best for Many

This method offers a number of benefits. First, you never lose ownership or control over your business, which can happen with larger investors. You also get the funding nearly immediately, meaning you don’t have to worry about financial delays. You pay based on the monthly cash flow your company has. Which means in slow months, you are not struggling to pay a large payment.

There are three options to consider when it comes to this type of revenue financing model. Determine which works for your needs.

ACH Loans for Business

If you’re considering the best unsecured business loan, an ACH loan may work best. This type of business loan is a revenue-based loan that’s paid back through ACH payments. These payments are set up by a bank and work much like any other electronic funds transfer. This funding method is very fast and safe to use. It allows for lenders to offer lower credit requirements. This isn’t a specific loan product, but rather a method of repaying a revenue-based loan, through electronic transactions. Lenders approve borrowers rather easily for this method as long as they have a credit score (usually no less than 500), an established business, and checking account monthly deposits (sometimes with a minimum requirement).

Merchant Cash Advances

A merchant cash advance is one of the most common options for this type of fast loan. Here, you pay a percentage of your daily credit card and debit card transactions to your lender, along with a fee. This is also a very fast method, but it can be a bit harder to require. Lenders often require a specific revenue minimum. Companies must be in business for at least a couple of years. Credit scores are a factor, though those as low as 550 may qualify.

Revenue-Based Financing for Tech Companies

This model allows individuals to avoid many of the holdups from traditional venture capital funding. It may be for specific industries, such as for the tech industry. Individuals pay between 2 to 8 percent of their monthly revenue and repayment can span a longer amount of time. Funding can take up to four weeks. However, it’s all based on the company’s revenue, business value, and time in business. It could be the ideal option for those who need a higher level of fund available in a short amount of time, such as startups.

Selecting the Best Revenue Based Financing for Your Needs

Choosing revenue-based financing options is a decision that a lender bases the specific needs of your business and your qualifications. By investing in these resources, you meet your financial obligations while also keeping costs in line with your needs.