The core idea
Revenue-based financing ties repayment to what the business actually earns. A business with strong sales pays more in that period; a business that has a lean stretch pays less. The cost of that flexibility is that you have to understand your own revenue pattern well, since the schedule depends on it. We do not publish rates or terms here, because the specific arrangement depends on the business.
Why it suits San Francisco's mix of businesses
Wikipedia reports that in 2016 roughly 27% of San Francisco workers were in professional business services, with high technology, finance and healthcare also named as leading sectors. Many of those businesses book revenue in uneven blocks: a retainer here, a project there, a software renewal cycle. A fixed monthly payment ignores that rhythm. A revenue-linked one is designed to move with it.
Is your revenue the right shape?
- Consistent deposits. Revenue-linked repayment works best when money comes in regularly enough to see a pattern.
- Margin you can spare. Any share of revenue sent to repayment is a share not available for payroll or rent. Know your margin first.
- A purpose that grows revenue. Marketing, inventory, or hiring that is expected to bring in more is the cleanest use.
A comparison with fixed-payment products
| Business situation | Revenue-linked | Fixed payment |
|---|---|---|
| Strong month | Pays down faster | Same payment |
| Slow month | Payment eases | Same payment, harder to cover |
| Very steady income | Little advantage | Predictable and simple |
If your income is very steady, term loans may be simpler. For a repeating small gap, look at a line of credit.
A worked example, for illustration only
Take round numbers that are not our terms: a six-person consulting firm bills about $90,000 in one month and $35,000 in the next because two projects close together. A fixed payment sized on the good month strains the lean one. A payment that scales with revenue would be higher in the first month and lighter in the second. The trade-off is that the total period can run longer when revenue is slow, so the owner should check the whole picture and not only the monthly payment.
Applying
We consider FICO scores of 500 and above, review about three months of business bank statements and need no tax returns. The application takes about five minutes with a soft credit pull. Funding runs from $25,000 to $5,000,000 and can arrive in as little as 24 hours. Sole proprietors can apply. Apply here. You can also read about merchant cash advances for a side-by-side view.