Revenue-based financing or a traditional business loan?
Both options can fund your business, but they are repaid, priced and assessed differently. Here is a neutral comparison to help you decide with judgement.
Quick comparison
A summary of the usual differences. These are general tendencies: each specific agreement may differ.
| Factor | Revenue-based funding | Traditional business loan |
|---|---|---|
| Repayment | Often linked to sales/revenue | Usually fixed schedule |
| Cost | Often fixed fee / product-specific | Interest/APR + possible fees |
| Flexibility | Can move with performance | Usually fixed |
| Underwriting | Often data-driven | Bank/credit process varies |
| Equity | Normally no equity | No equity |
| Legal structure | Provider/product dependent | Loan |
| Typical fit | Working capital / growth | Broad range of needs |
Repayment
With revenue-based financing, you repay an agreed share of your sales each period until a total set in advance is completed. If you sell less one month, less is repaid that month; if you sell more, you finish sooner.
With a loan, the usual structure is a schedule of fixed instalments (for example, monthly) over a set term, regardless of how sales are going.
Cost
Revenue-based financing often costs a fixed fee on the amount: you know the total from the start. But as there is no fixed term, if you repay quickly the equivalent annualised cost can be high.
A loan expresses its cost as an interest rate (APR) plus possible additional fees, for example for early repayment. In general, a bank loan can be cheaper if your company can access one.
The fairest way to compare is to look at the total repayment and the realistic term of each option.
Flexibility
Having repayment follow sales gives room in slow months, which is useful for seasonal businesses. In exchange, the total duration isn’t fixed.
With a loan, the instalment is predictable, which makes planning easier, but it has to be paid even if the month went badly.
Underwriting
Revenue-based providers often analyse real sales, payment and cash-flow data, which can speed up the decision.
Banks combine financial statements, credit history, collateral and other criteria; timelines and requirements vary widely between institutions.
Equity
Neither option normally involves giving up equity in your company. That is the big difference from raising investment.
Legal structure
A loan is a loan. Revenue-based financing, by contrast, can be structured in different ways (for example, as a purchase of future receivables) depending on the provider. This affects your rights and obligations, so ask and read the agreement.
Typical fit
Revenue-based financing is typically used for working capital and short-term growth: inventory, marketing, cash gaps. A loan covers a broader range of needs, including long-term investments.
When each one fits
There is no better option in the abstract. It depends on what you need the money for, what your sales look like and what financing you can access.
Revenue-based financing may fit better if…
- Your sales are recurring but seasonal
- You need capital for something that generates sales soon (stock, marketing)
- You value speed and a known total cost
- You prefer not to commit to a fixed instalment
A loan may fit better if…
- You can access bank financing at a lower cost
- You need large amounts or long terms
- The investment is long-term (property, machinery)
- Your income is stable and a fixed instalment doesn’t worry you
They can also be combined: some businesses use a loan for long-term investments and revenue-based funding for stock peaks or campaigns.
Where FundRapido fits
FundRapido offers revenue-based funding sized to their sales for companies and sole traders registered in Spain, with a single fixed fee (set in each offer and known before you accept) and repayment through a share of your sales. We charge no interest, there are no fixed instalments and we take no equity in your company.
If a bank loan is cheaper for you and fits your need, it may be the better option. We recommend comparing real offers.
How much could your business get?
Enter your monthly sales and time in business to see an indicative amount.
Compare with a real offer
Apply in a few minutes: you see the amount, the fixed fee and the total repayment before you accept. If approved, the money reaches your account within 48 business hours of signing the contract.