Revenue-Based Loans

A revenue-based loan (also called revenue-based financing or RBF) is a type of funding where a business borrows money and repays it as a percentage of its future revenue. Unlike traditional loans with fixed monthly repayments, repayments for revenue-based loans fluctuate based on the business’s actual revenue performance, making them particularly suited for businesses with variable income.


What Are Revenue-Based Loans?

There are two primary types of revenue-based loans:

  • Flat Percentage Revenue Share Loans: Businesses repay a fixed percentage of their revenue (e.g., 10% or 15%) until the loan, plus a fixed fee, is fully repaid. The repayment period depends on the business’s revenue performance.
  • Minimum Commitment Revenue-Based Loans: Along with revenue-based repayments, businesses must commit to a minimum monthly repayment, ensuring the lender recoups a baseline amount even during slower periods.

Advantages of Revenue-Based Loans

Flexible Repayments – Payments adjust based on revenue, making it easier for businesses to manage cash flow during slow periods.

No Fixed Collateral Required – These loans typically don’t require physical assets as security, reducing risk for the borrower.

Fast Approval and Access – Revenue-based loans often have a quick approval process, making them ideal for businesses needing rapid funding.

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Examples of Revenue-Based Loans

Business A: Online Retail Business

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Business Profile: An online retailer specialising in sustainable and eco-friendly products, looking to grow its operations.

Revenue-Based Loan Need: Business A needs funding to expand its marketing efforts and increase stock levels to meet growing customer demand.

Loan Details:

  • Loan Amount: £50,000
  • Repayment: 10% of monthly revenue
  • Total Repayment: £70,000 (loan amount plus fixed fee)

Scenario:

  • Business A receives £50,000 upfront to invest in social media ads and bulk-purchase stock.
  • Monthly repayments vary depending on sales performance with higher repayments in strong months, lower in slower months.
  • The loan is repaid within 14 months, with an estimated £50,000 in monthly revenue required to meet repayment on schedule.
sustainable eco friendly products

Business B: Seasonal Tourism Business

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Business Profile: A company offering guided hiking and adventure tours, with seasonal peaks in spring and summer.

Revenue-Based Loan Need: Business B needs £30,000 to purchase new equipment and hire additional guides for the upcoming peak season.

Loan Details:

  • Loan Amount: £30,000
  • Repayment: 12% of monthly revenue
  • Total Repayment: £42,000 (loan amount plus fixed fee)

Scenario:

  • Business B uses the £30,000 to prepare for the busy season, acquiring equipment and staffing up.
  • During spring and summer, the business generates high revenue, repaying larger amounts during these months.
  • In the off-season, when revenue drops, repayments are smaller, ensuring manageable cash flow.
  • The loan is fully repaid after 10 months, with an estimated £35,000 in monthly revenue required to stay on track.
an adventure in a kayak

Why Use a Revenue-Based Loan for Your Business?

Revenue-based loans (RBLs) provide a unique and flexible funding option for businesses with steady or variable revenue. They are particularly appealing for businesses looking to grow without taking on traditional debt or giving up equity. Here’s why they can be beneficial:

  • Flexible Repayment Structure
  • No Fixed Repayment Term
  • Quick and Easy Access to Funds
  • No Equity Dilution
  • No Additional Collateral Needed
  • Scales with Business Growth
  • Predictable Costs
  • Minimal Financial Risk
  • Tailored for Revenue-Generating Businesses
  • Helps Fund Growth Opportunities
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How does a Liquidity business loan work?

1

Apply Online

Start by submitting your application on our website, quick and easy!

2

We Search for the Best Lender

We scan our panel of trusted lenders to find the one that best fits your needs.

3

Connect with Your Lender

We introduce you to the lender, and they’ll take it from there to complete your application. You could get funds in as little as 24 hours.

Types of Revenue Based Loans

Traditional Revenue-Based Loan (RBL)

Revenue-Based Financing with a Subscription Model (for SaaS or Recurring Revenue Businesses)

Short-Term Revenue-Based Loan

Long-Term Revenue-Based Loan

Invoice Financing with Revenue-Based Repayment

Profit-Sharing Revenue-Based Loan

Royalty Financing (Revenue Share Loan)

Business Loans

What is a Revenue-Based Loan?

A Revenue-Based Loan is a financing option where businesses receive upfront capital and repay the loan as a percentage of their monthly revenue, allowing flexible payments based on income.

How does a Revenue-Based Loan work?

The lender provides funding, and the business repays the loan with a fixed percentage of its monthly revenue until the total loan amount plus fees is repaid. Payments adjust with fluctuations in revenue.

How can a Revenue-Based Loan help my business?

It provides flexible funding for expenses like marketing, hiring, or stock without the burden of fixed monthly payments, aligning repayment with cash flow.

What are the requirements to qualify for a Revenue-Based Loan?

Lenders typically require consistent revenue streams, business financial statements, a minimum revenue threshold, and sometimes a minimum operational history (e.g., 6 months to a year).

How much can I borrow with a Revenue-Based Loan?

The loan amount is usually based on your monthly or annual revenue, typically ranging from £5,000 to £2 million or more.