Revenue-based financing replaces the fixed monthly payment with a percentage of what you sell. Good months repay faster; slow months repay less. For businesses whose revenue moves, it is the structure that moves with them.
The mechanics
You receive a lump sum, the advance. You agree to remit a fixed percentage of revenue, commonly around 5%, until a fixed total, the payback amount, is reached. Remittance usually happens as a small daily or weekly debit calculated from your average deposits and trued up to actual revenue.
Factor rate, not interest rate
The cost is expressed as a factor. A 1.25 factor on $50,000 means the payback amount is $62,500. There is no compounding and no changing rate; the total is known on day one. To compare with an interest rate, look at the total cost over the months you expect to take to repay.
A worked example
A restaurant deposits $60,000 a month. It takes a $50,000 advance at a 1.25 factor, payback $62,500, at 5% of revenue. At $60,000 a month, remittance is about $3,000 a month, roughly $143 per banking day. If December brings $80,000 in sales, remittance rises to $4,000 and the balance shrinks faster. If February drops to $40,000, remittance falls to $2,000 and the restaurant keeps breathing room.
Why 5%
Five percent is the level at which most businesses can remit without feeling it in operations. Lenders can set it higher for a shorter payback or lower for a longer one; Belmont's standard structures start around 5% of monthly revenue.
Who it suits
- Restaurants, retailers and e-commerce sellers with daily card deposits
- Seasonal businesses: landscaping, tourism, construction
- Owners with past credit problems who have strong deposits
- Short-term needs where speed matters more than a multi-year term
Who should look elsewhere
If the investment pays back over three to five years, a term loan or equipment financing with a fixed payment is usually cheaper over that horizon. A specialist can show both options from one application.
Next step
See what your business qualifies for
Businesses with $20,000+ in monthly revenue and six months of history qualify. Three minutes, three bank statements, decision in minutes.