Revenue-based financing

Definition

Debt repaid as a share of monthly revenue instead of fixed payments.

Why It Matters

It is the rare lane where no personal guarantee is the product: the lender takes a share of revenue until a capped amount is repaid, so your house never enters the deal. The price is real, rates several points above a bank's, leverage capped near 2 to 3x EBITDA against what an SBA structure reaches, and the lane exists almost entirely for SaaS and online businesses with subscription revenue. A main-street buyer reads about it and still ends up at the 7(a); an online-business buyer prices the guarantee they keep against the rate they pay, and the vendor set churns fast enough that the first call should confirm the product still exists.

In numbers: On a SaaS business earning $400k EBITDA, a revenue-based lender advancing 2.5x lends up to $1M with no personal guarantee, at rates from 16% where a bank quotes single digits.