Revenue-Based Financing

Revenue-Based Financing

At some point, almost every small business needs growth capital. Depending on your business revenue and model, there are a variety of ways you can obtain the capital you need, including bank loans, equity financing, and debt financing. For companies who have consistent, monthly revenue streams, revenue-based financing may be the best option.

How Does Revenue-Based Financing Work?

Revenue-based financing, also referred to as royalty-based financing, is different than a fixed loan. Instead of having fixed payments, royalty-based financing allows the business to make monthly payments in proportion to their revenue for that month.

The size of the payment is a percentage of the monthly revenue, which means that it fluctuates depending on how the company is doing. This means that if a company’s cash flow decreases one month, then their monthly payment will be smaller. Conversely, if that same company has a great month, their payment will be larger.

The amount that you can receive varies lender to lender, depending on the needs and qualifications of the company.

Who Qualifies for Revenue-Based Financing?

Revenue-based financing is perfect for SaaS businesses and other companies whose primary income is based on subscriptions. A consistent high monthly recurring revenue (MRR) along with high gross margins combine to qualify a business for a royalty-based loan.

Those qualifications almost exclusively apply to young tech companies, including telecom, tech services (TS), platform as a service (PaaS), and Software as a Service (SaaS) companies. Each of these business types are almost exclusively dependent on monthly recurring revenue from subscriptions.

Generally, companies who obtain revenue-based funding use it as a form of growth capital. For the most part, there are few stipulations for how you may use the money once you get it. This means that you could spend the money on a new marketing and sales campaign, develop a new product, or hire more staff, depending on your exact needs.

How Does It Compare to Other Types of Loans?

Compared to alternative funding options, revenue-based funds have significant upsides for companies with consistent MRR and profit margins.

On the one hand, small business loans from banks or other lenders typically involve collateral and a personal guarantee of repayment. The loan amount usually does not provide the amount of growth funding that the business actually needs. The interest rates are typically quite low, but obtaining one can prove to be difficult.

Venture capital is the most common way for tech companies to obtain capital. When venture capitalists believe in a business’s potential to scale quickly, they will invest immense amounts of money. However, they usually require you to give up some control (in the form of a board seat) and equity.

Conversely, revenue-based funds allow you to obtain significant capital without the hassle of a bank loan or giving up control and equity as with venture capital. For the majority of companies, revenue-based financing simply does not fit their business models. However, for tech companies with strong MRR and profit margins, revenue-based funds are easily the best type of financing.


At RevTek, we provide revenue-based financing that works for your company. We work with you to craft a repayment plan based on your MRR. By focusing on a percentage of future revenue, we avoid taking any control or equity in your company.
Our process and terms are simple, and you can obtain as much as $2 million in growth capital. You can use the capital to meet any of your business’s needs and improve your sales and marketing, expand your broadband network or broadband development, acquire new equipment through purchase or equipment leasing, or develop new services. Contact us today.

Increase the cash flow to your business

while increasing equity at the same time