Revenue-based financing explained without financial jargon

1. What it is

Revenue-based financing (RBF) is a way of getting capital upfront in exchange for a repayment structure linked to the business’s future revenue. Instead of paying a fixed instalment every month, the business repays an agreed percentage of its sales until a total amount, set from the start, has been repaid.

It is important to know there is no single model. The exact legal structure, cost and repayment mechanics vary by provider and by agreement. That is why you should always read the actual agreement, not just the product name.

It is typically used for short- to medium-term needs linked to sales: buying inventory, funding marketing campaigns that already work, or bridging the time between a sale and getting paid for it.

2. How repayment works

The mechanics usually rest on three elements that should appear clearly in any offer:

• Amount received: the capital that reaches your account.
• Total repayment: the amount received plus the agreed cost. You know it before signing.
• Share of sales: the part of your sales used for repayment in each period (the frequency depends on the provider; with FundRapido it is monthly).

Collection can work in different ways: a direct debit calculated on the period’s sales, withholding part of the payouts from a payment processor or marketplace, or other mechanisms. Always ask how each period’s amount is calculated and from which data.

As there is no fixed instalment schedule, there is no exact end date either: the duration depends on how your sales evolve. Some agreements include an indicative term, minimums per period or other conditions; read them carefully.

3. Advantages

• It adapts to the business’s pace. If you sell less in a period, that period’s repayment also goes down.
• Known cost. When the cost is a fixed fee, you know from the start how much you will repay in total.
• No equity given up. You don’t bring in investors or dilute your ownership.
• Data-based decision. Many providers look at real sales and cash flow, which can speed up the process compared with a more paperwork-heavy review.
• Fits uses that generate sales. Inventory or marketing that already works tends to produce the revenue used to repay.

4. Trade-offs and limits

No form of financing is free or perfect. Before deciding, consider:

• It can cost more than a bank loan. If you repay quickly, a fixed fee is equivalent to a high annual cost. Compare the total repayment, not just the percentage.
• Limited amounts. It is usually sized on current sales, so amounts are capped.
• It takes cash from every sale. Part of each period’s sales goes to repayment; with very thin margins, it can squeeze cash flow.
• Uncertain duration. If sales fall for a long time, repayment takes longer.
• Agreements differ between providers. Minimums, penalties, guarantees or early repayment terms vary a lot.

A practical tip for comparing: put your options side by side and note, for each one, the amount you receive, the total you repay, how much leaves your cash in a normal month and in a slow month, and how long it would take to finish with realistic sales. That simple table usually tells you more than any standalone percentage.

5. Who it tends to suit

• Businesses with recurring, reasonably stable sales, especially online or card-based.
• Online stores and marketplace sellers that need to buy stock before the season.
• Companies with profitable marketing campaigns they want to scale.
• Businesses that need to bridge the time between the sale and getting paid.
• Owners who prefer not to give up equity or commit to a rigid fixed instalment.

In general, it works best when the money is used for something that generates sales relatively quickly and whose return you can estimate, such as a stock order you already know sells.

6. Who it may not suit

• Companies with no sales yet or very little history: there is no revenue to base repayment on.
• Businesses with very low margins, where setting aside part of sales for repayment leaves little to operate with.
• Long-term investments (property, heavy machinery) that don’t generate sales in the short term.
• Anyone covering structural losses: financing a loss-making business usually makes the problem worse.
• Companies that can access a cheaper bank loan and whose need doesn’t require flexibility.

7. How it differs from a loan

A traditional loan usually has a fixed instalment schedule and a cost expressed as an interest rate (APR) plus possible fees. In revenue-based financing, repayment is linked to sales and the cost is often a fixed fee on the amount.

The legal nature can differ too: some products are structured as a purchase of future receivables and others as loans. It depends on the provider and the agreement.

See the full comparison

8. Questions to ask any provider

Whether you talk to FundRapido or any other provider, get written answers to these questions:

1. What is the total repayment and can it change after signing?
2. What share of my sales goes to repayment and how is each period calculated?
3. How is it collected: direct debit, withholding from payouts or something else?
4. What happens if my sales drop sharply or stop temporarily?
5. Are there other fees, minimums per period or penalties?
6. What happens if I want to repay early? Does the cost go down?
7. What guarantees are required? Is there a personal guarantee?
8. What is the legal nature of the agreement and who is the contracting entity?
9. What data from my business do you need and how do you protect it?

9. How FundRapido does it

FundRapido offers revenue-based funding to companies and sole traders registered in Spain. This is how our version works, so you can compare it with others:

• An amount based on your sales and the money in your account within 48 business hours of signing the contract, if approved.
• One fixed fee, set in each offer and known before you accept.
• You repay through a share of your sales until the total is completed. No interest, no fixed instalments and no equity.
• No personal guarantee, except in case of fraud.
• You can repay early without any penalty; the fee does not change.

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