How revenue-linked funding works
A provider assesses sales and other business information, advances an agreed sum and sets a fee or pricing structure. Collection may be an agreed percentage of eligible receipts. Some brands also offer fixed-payment products, so do not assume every offer from a sales-finance provider flexes with revenue.
The calculation base matters. Gross platform sales, net settled receipts and card transactions are different numbers. Ask how refunds, taxes, marketplace reserves and multiple payment processors are treated before modelling the cash left for operations.
A fixed fee is not an annual interest rate
An assumed £50,000 advance with a £5,000 fixed fee creates £55,000 to repay. If 10% of £80,000 eligible monthly receipts is collected, £8,000 would go to repayments that month. At £40,000 receipts, that collection would be £4,000 under the same assumptions.
Those figures illustrate collection mechanics, not an offer or a guaranteed repayment term. A 10% fee is not a 10% APR. The annualised cost depends on when money is advanced and repaid, including how quickly sales accelerate repayment.
What providers look for in trading data
Providers may review business bank statements, payment-processing history, ecommerce-platform sales, refunds and existing borrowing. A rising top line can be less useful than reliable net receipts and a margin that supports both business costs and deductions.
Trading-period and revenue thresholds vary by product. A start-up forecast alone may not meet a requirement for actual historical sales. Confirm which legal structures, sectors, jurisdictions and connected platforms the specific funder accepts.
Stress the repayment share against contribution margin
A deduction from sales comes before the business has necessarily paid stock, fulfilment, advertising or payroll. Model the resulting bank balance, not merely whether the percentage looks small. Refunds and advertising spend can rise even when sales look healthy.
Check minimum payments, a final maturity date, reconciliation provisions, security and any personal guarantee. Taking a second advance can layer another claim over the same receipts. Understand the cost and permission requirements before stacking facilities.
Compare revenue-based finance with other options
A fixed-term loan can provide a clearer payment schedule if revenue is predictable. Invoice finance may fit business-to-business receivables, while asset finance can match a long-lived purchase. Equity avoids scheduled debt repayments but changes ownership.
Compare the total fee, net advance, collection basis and realistic repayment dates—not just a starting monthly fee. A calculator using equal instalments cannot reproduce every sales-linked agreement, so use it only with its stated assumptions.
A few things worth knowing
Common questions
Is revenue-based finance the same as a merchant cash advance?
They overlap, but the terms are not always identical. An MCA commonly uses card or payment-processor sales; broader revenue-based products may use other receipts. The contract and collection mechanism matter.
Do repayments always fall when sales fall?
Only if the particular contract uses sales-linked collections in that way. Minimum payments, deadlines or fixed-payment products can change the outcome.
Does a fixed fee mean there is no cost?
No. A fixed fee is a finance cost even when the provider does not charge interest. It should not be presented as an APR without the necessary cash-flow calculation.