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 run several points above a bank's, and the amount available is capped against a multiple of earnings well below what an SBA structure reaches. 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. The vendor set churns fast, so the first call should confirm the product still exists.

In numbers: On a SaaS business earning $600k EBITDA, a revenue-based lender advancing 2.5x lends up to $1.5M with no personal guarantee, at rates from 16% where a bank quotes single digits.