Key Takeaways
- Revenue-based funding repays as a percentage of daily sales
- Payments flex with revenue — slow days mean smaller payments
- No collateral, no green card, no SBA eligibility required
- Perfect for restaurants, retail, and service businesses with card revenue
- Bankable evaluates your revenue — not your immigration status
Revenue-based funding (RBF) — also called a merchant cash advance (MCA) or revenue-based financing — is a form of business capital where repayment is tied directly to your business's daily or monthly revenue. Instead of fixed monthly payments regardless of revenue, you repay a fixed percentage of your actual sales. When your business is doing well, you repay faster. When revenue is slower, your payment is smaller.
This structure was invented for the real world of small business — where revenue is rarely perfectly predictable month to month — and it is particularly well-suited for TPS businesses because it eliminates the need for the income consistency that traditional banks require.
How Revenue-Based Funding Works Step by Step
- Application: Provide your bank statements and business information. Bankable evaluates your average monthly revenue.
- Advance: Bankable provides a lump sum — typically 50-150% of your average monthly revenue.
- Repayment: Each day, a fixed percentage of your card processor deposits is automatically collected. This percentage is called the "holdback rate" — typically 8-18%.
- Completion: Repayment continues until a predetermined total repayment amount (your advance plus a factor fee) is collected. There is no fixed end date — the term depends on your revenue.
Example: Pupuseria in Northern Virginia
A pupuseria owner in Arlington, Virginia generates $45,000/month in card sales. Bankable advances $45,000 (1x monthly revenue) with a total payback of $58,500 (factor rate 1.30). At a 12% daily holdback rate, the daily collection averages $162. At that rate, the advance repays in approximately 361 days. If the restaurant has a great weekend and processes $2,800 on Saturday, the holdback that day is $336 — faster paydown. On a slow Tuesday with $800 in sales, the holdback is $96.
For a more detailed comparison of revenue-based funding vs. traditional loans, see our Bank vs. Bankable comparison guide.
Frequently Asked Questions
Revenue-based funding provides a lump sum advance repaid through a fixed daily percentage of your business's card sales or bank deposits. Payments flex with actual revenue.
Technically it is structured as a purchase of future receivables, not a loan. This means there is no fixed interest rate or APR in the traditional sense — instead there is a factor rate applied to the advance.
A factor rate multiplies your advance to determine total repayment. A factor rate of 1.30 on a $50,000 advance means you repay $65,000 total, regardless of how long it takes.
Typically 8-18% of daily card processing deposits, depending on your revenue volume and the advance amount.
Yes. Early payoff is possible and encouraged. Some agreements include an early payoff discount — ask your Bankable advisor.
In APR terms, often yes. In practical value, the comparison is different: bank loans are unavailable to TPS holders, while revenue-based funding is available. The relevant comparison is the cost vs. no funding at all.
Typically $10,000-$25,000/month in card processing deposits or bank statement deposits, depending on the product and amount.
If the holdback rate is too high relative to your margins, daily payments can strain cash flow. Bankable calibrates holdback rates to be manageable — typically 8-15% for most businesses.