Key Takeaways
- Revenue-based funding repays as a percentage of future sales — not a fixed monthly payment
- The cost is expressed as a factor rate (e.g., 1.25) not an annual interest rate
- No green card, no citizenship required — only revenue and an EAD
- Repayment automatically slows in slow months and speeds up in strong months
- Works for any industry that generates consistent business revenue
What Is Revenue-Based Funding?
Revenue-based funding (also called merchant cash advance or revenue-based financing) is a type of business funding where the repayment is tied directly to your business revenue. Instead of paying a fixed monthly installment, you pay a percentage of your daily or weekly deposits until the total payback amount is reached.
This structure makes revenue-based funding uniquely suited to small businesses with variable revenue — which describes most parole-status small businesses in their first few years of operation.
How the Factor Rate Works
Revenue-based funding uses a "factor rate" instead of an annual percentage rate (APR). The factor rate is a multiplier applied to the amount you borrow. For example:
- You receive $100,000 in funding
- Your factor rate is 1.30
- Your total payback amount is $100,000 × 1.30 = $130,000
- You owe $30,000 in fees total, regardless of how fast or slow you repay
Bankable's factor rates typically range from 1.15 to 1.45 depending on your revenue consistency, business age, and funding amount. Higher-revenue, longer-tenured businesses with consistent deposits qualify for lower factor rates.
How Repayment Works
Repayment is structured as a percentage of your daily or weekly business bank deposits — typically called the "holdback rate" or "retrieval rate." A typical holdback might be 8–15% of daily deposits.
Example: Your business deposits $3,000 per day on average. At a 10% holdback, $300 per day goes toward repayment. At that rate, a $100,000 advance (with $130,000 total payback) would be repaid in approximately 433 business days — about 18 months.
The key feature: if your revenue drops to $1,000 per day in a slow month, your repayment drops to $100 per day automatically. The total payback amount doesn't change, but the daily pace adjusts to match your actual business performance.
Revenue-Based Funding vs. SBA Loans for Parolees
SBA loans offer lower costs (rates of 7–11% APR for qualified borrowers) but are entirely inaccessible to humanitarian parolees as of March 2026. Revenue-based funding is accessible immediately with an EAD — but at a higher effective cost (factor rates of 1.15–1.45 translate to effective APRs of 30–80% depending on repayment speed).
For most parole-status business owners, the calculation is: "I can't wait 2–5 years for a green card and then go through a 90-day SBA process. I need capital now, and revenue-based funding is the path." The higher cost is the price of access — and for most businesses, the revenue generated by the funded activity more than offsets the cost.
Check your Bankability Score to see your factor rate estimate. Learn more at our SBA alternatives page.
Frequently Asked Questions
Revenue-based funding is a type of business financing where you repay by sharing a percentage of future revenue until a fixed total payback amount is reached — instead of fixed monthly payments.
A factor rate is a multiplier applied to your advance amount to calculate your total payback. A factor rate of 1.30 on a $100,000 advance means you repay $130,000 total.
Traditional loans charge interest on the outstanding balance with fixed monthly payments. Revenue-based funding charges a flat fee (factor rate) and repays as a percentage of revenue — so payments flex with your business.
Yes, typically. The effective APR is higher than SBA or bank loans. The trade-off is that it's available to parolees without citizenship, approved in 24–48 hours, and repays flexibly.
Your repayment amount drops automatically. The holdback percentage remains constant, but if daily deposits fall, the daily repayment amount falls too. The repayment period simply extends.
Yes. Bankable has no prepayment penalty. Paying off early saves you on the remaining fees since the factor rate is applied to the original advance, not a declining balance.
Bankable's factor rates typically range from 1.15 to 1.45. The specific rate depends on your revenue consistency, business age, and the amount requested.
Yes. Revenue-based funding is specifically well-suited to parole-status business owners because the underwriting is based entirely on revenue, not citizenship or immigration status.