How revenue-based financing works
In revenue-based financing a funder advances cash and you pay back a fixed percentage of your monthly revenue, sometimes called the remit rate or revenue share, until you have repaid an agreed total called the repayment cap. The cap is a multiple of the advance: a cap of 1.4 on $100,000 means you pay back $140,000. There is no interest rate on a falling balance, so the cost is the cap less the cash you receive.
Because payments follow revenue, a strong month pays more and a slow month pays less, while the total stays capped. That makes the annual cost depend on speed: the faster the cap is repaid, the higher the APR. This calculator shows the time to repay and the APR for the revenue path you enter.
Worked example: $100,000 with a 1.4 cap
Take a $100,000 advance with a repayment cap of 1.4, no origination fee, monthly revenue of $75,000 and a revenue share of 7%. The total payback is $140,000.00, so the financing costs $40,000.00, which is 40.00% of the advance. The first month's payment is 7% of $75,000, or $5,250.00.
If revenue stays flat it takes 27 months to repay the cap, an average of $5,185.19 a month, because the final payment is smaller. The APR is 31.27% as a nominal annualized rate. A $100,000 term loan at 10% paid over the same 27 months would cost $4,151.33 a month and $12,085.87 in interest, so the revenue-based financing costs $27,914.13 more.
Growing or shrinking revenue
Enter a monthly growth rate to see how changing revenue moves the schedule. With a 2.5% origination fee, so you receive $97,500.00 and the cost is $42,500.00, and revenue growing 4% a month, the cap is repaid in 19 months instead of 27 and the APR is 42.57%, compared with 33.82% if revenue had stayed flat.
Shrinking revenue stretches the repayment. With a 1.5 cap, a 9% share on $75,000 (a first payment of $6,750.00) and revenue falling 1% a month, the cap takes 26 months instead of 23 on flat revenue, and the APR is 42.74% rather than 45.69%. If revenue falls so far that the cap is not repaid within 10 years, the calculator stops and asks you to raise the share or revenue.
Origination fees and larger advances
Some funders also charge an origination fee taken from the advance. On a $250,000 advance with a 1.2 cap, a 5% fee, $400,000 of monthly revenue and a 4% share, you receive $237,500.00 and pay back $300,000.00. The financing costs $62,500.00, which is 25.00% of the advance. The first payment is $16,000.00, repayment takes 19 months and the APR is 29.81%.
Checking against a published example
Shopify gives an example of revenue-based financing: a $20,000 advance with a repayment cap of 1.5 means $30,000.00 to pay back, and with a 5% revenue share on $50,000 of monthly revenue the payment is $2,500.00 a month, which takes one year. Entering those terms reproduces the total and the monthly payment, and shows the cost as an APR of 82.38%, because $10,000.00 of cost is paid over only 12 months. Shopify says caps typically range from 1.2 to three times the advance, so compare the cap, not just the share.
If your funder quotes a factor rate and a fixed holdback instead, use the merchant cash advance calculator.
To turn any quote into an APR, use the business loan APR calculator.
What this calculator leaves out
This is a planning tool. It assumes revenue follows a steady monthly percentage change, that the share applies to the revenue figure you enter, and that the funder takes the full share each month. Real contracts can define revenue differently (gross or net of refunds, returns and taxes), set minimum payments or a maximum term, or fund in tranches, and none of that is modeled. It also does not model any tax effect of the financing cost.
The APR here is the nominal annualized rate at which your monthly payments repay the cash you receive. It is not a rate quoted under federal truth-in-lending rules, and a funder may quote the cost another way. Rely on your contract, and check how it defines revenue and when the cap ends.
To compare with a conventional term loan, use the business loan calculator.
For fixed-payment short-term financing, see the working capital loan calculator.
Use the right country page
This page stays in dollars and uses US terms: revenue-based financing, origination fee, remit rate and APR as a nominal annualized rate. The country choices above the inputs open separate local pages. Choosing United Kingdom opens the UK revenue based loan calculator, which uses pounds, an upfront fee and an effective annual APR. The inputs reset and amounts are not converted.
Inputs for the revenue-based financing calculator
Advance amount
The cash the funder advances, before any origination fee is taken from it.
Repayment cap
The most you pay back, as a multiple of the advance. A cap of 1.4 means 1.4 times the advance.
Origination fee
A percentage of the advance taken from the cash you receive. It raises the cost and the APR.
Monthly revenue
Your revenue in the first month of repayment, as your contract defines revenue.
Share of revenue repaid
The percentage of each month's revenue remitted to the funder until the cap is reached.
Monthly revenue growth
A steady monthly change in revenue. Use a negative number for shrinking revenue and zero for flat revenue.
Compare with a loan at
The yearly rate of a fixed-term loan of the same size, paid back over the same number of months.
CALCULATOR QUESTIONS
US revenue based financing calculator questions
How do you calculate revenue-based financing?
Multiply the advance by the repayment cap for the total payback, then pay a fixed share of each month's revenue until that total is reached. $100,000 at a 1.4 cap is $140,000.00, and 7% of $75,000 is $5,250.00 in the first month.
How long does revenue-based financing take to pay back?
It depends on your revenue. On flat revenue of $75,000 with a 7% share, the $140,000.00 cap takes 27 months. With a 2.5% fee and revenue growing 4% a month, it takes 19 months.
Is there an interest rate on revenue-based financing?
Usually not. The cost is the cap less the cash you receive, which is $40,000.00 on the $100,000 example. The calculator turns that into a nominal annualized APR of 31.27% so you can compare it with a loan.
Why does paying back faster raise the APR?
The cap is fixed, so the same cost is paid over fewer months. Growth of 4% a month with a 2.5% fee shortens the payback from 27 to 19 months and gives an APR of 42.57% instead of 33.82%.
What happens if my revenue drops?
Your payment drops with it and the payback period gets longer. The total stays capped, but the calculator stops at 10 years because a very small payment may never reach the cap.
How does it compare with a term loan?
Enter a loan rate to compare. The example costs $27,914.13 more than a 10% loan over the same 27 months, but it has no fixed payment and follows your sales.
What happens when I change country?
The United Kingdom option opens the separate UK revenue based loan calculator, in pounds, with an upfront fee and an effective annual APR. Your inputs are reset rather than converted.