Revenue-Based Finance UK

What revenue-based finance actually is

Revenue-based finance (RBF) advances you a lump sum today and takes it back as a fixed percentage of your future revenue, usually 5 to 25% of what you collect each month, until you have repaid the advance plus a flat fee. There is no fixed monthly instalment and no interest compounding in the background. You agree the total repayable before you sign, and the only variable is how long it takes to get there: strong months clear the balance faster, quiet months slow it down. The lenders who write this are not high-street banks. They are specialist revenue-finance platforms that connect to your Stripe account, your accounting software, or your card terminal and price the deal off the revenue they can see, not the book profit a set of filed accounts shows.

The fee and factor structure, caveated

Cost on an RBF facility is quoted one of two ways, and it pays to know which you are being offered. Some providers state a flat fee on the advance: borrow £100,000 at an 8% fee and you repay £108,000 in total, full stop. Others use a factor rate, typically 1.06 to 1.5, so a 1.12 factor on £100,000 means £112,000 repayable. Either way there is no APR ticking over and no penalty for the balance sitting longer than expected, which is the point of the product. What we cannot do, and what no honest broker can do, is promise you a fee or a factor before a lender has seen your data. The number turns on your margin, how consistent your revenue is, how long you have been trading, and which platform the lender uses to verify sales. Where we add value is knowing, before you apply, which lenders price your revenue shape keenly and which will load the fee to cover risk they do not understand.

Eligibility: it comes down to revenue you can prove

RBF underwriting is built on revenue data, not property or a strong balance sheet, so the entry test is whether your income is verifiable and reasonably steady. Two revenue types qualify most cleanly. Card revenue, where a terminal or online checkout gives the lender a clean feed of takings, suits hospitality, retail, and any business that sells face to face. Online revenue, read directly from Shopify, Amazon Seller Central, WooCommerce, Stripe, or a subscription billing system, suits e-commerce brands and SaaS. Most lenders we work with want at least £10,000 to £20,000 of monthly revenue with six months of history behind it, though some go earlier and some focus on businesses above £50,000 a month. Consistency matters more than the headline figure: a business taking £15,000 every month reads better than one doing £60,000 in December and £5,000 in January. Project-based, lumpy, or highly seasonal revenue does not disqualify you, but expect a higher retention percentage or a higher fee to compensate.

How repayments flex with revenue

This is the mechanic that separates RBF from a loan. The retention percentage, the slice of revenue the lender takes, is fixed at the start and does not change for the life of the facility. The absolute pound amount breathes with the business. Collect £40,000 in a strong month on a 10% retention and £4,000 goes to repayment. Collect £20,000 the next month and only £2,000 leaves your account. You do not request a payment holiday, you do not call anyone, and a quiet month does not trigger a default or a late fee, because there was never a fixed sum due. That self-adjusting quality is why seasonal retailers and early-stage SaaS businesses reach for it: the repayment shrinks in the exact months cash is tight.

How it compares to a term loan

A term loan hands you a fixed monthly repayment that falls due whether you had a record month or your worst quarter in two years. It is usually cheaper on a like-for-like basis when your revenue is stable, and it can run for years rather than months. RBF costs more in flat-fee terms but removes the fixed obligation, and it is often approved on revenue a bank would not lend against because the book profit is thin. If your income is predictable and you can service a set instalment comfortably, a term loan is frequently the better buy. If your revenue swings, or you cannot yet show the profit a bank wants, RBF earns its premium.

How it compares to a merchant cash advance

A merchant cash advance (MCA) is a close cousin and often confused with RBF. An MCA specifically advances against card takings and repays as a percentage of daily card settlements. RBF is broader: it can be sized against total revenue, including invoiced, subscription, and online sales, not just card volume. The pricing logic, a fee or factor on the advance rather than compounding interest, is nearly identical, and the flexing repayment works the same way. The practical difference is fit. If almost all your income arrives through a card terminal, an MCA is purpose-built for you. If your revenue is a mix of card, online, and recurring billing, RBF captures the whole picture and usually sizes a larger advance as a result.

Illustrative worked example (illustrative only, not a quote)

Take a Shopify brand collecting a steady £50,000 a month. It draws a £60,000 advance at an agreed 1.15 factor, so £69,000 is repayable, at a 12% retention rate.

- Month 1, revenue £50,000: repayment £6,000, balance £63,000

- Month 2, revenue £70,000 (a strong campaign): repayment £8,400, balance £54,600

- Month 3, revenue £30,000 (a seasonal dip): repayment £3,600, balance £51,000

The pace changes with the trading; the £69,000 total does not. In this example the balance clears in roughly ten to twelve months depending on how the revenue lands. These figures are illustrative, shown to explain the mechanics only. They are not an offer, and your fee, factor, and retention rate will be set by the lender after they review your revenue data.