Revenue-based financing offers a unique approach to funding business growth. This article presents insights from industry leaders on how this financing model can benefit companies. Experts discuss key advantages, including aligning capital with business cycles and scaling operations without sacrificing control.
Align Financing with Business Cycles
Revenue-based financing has been fantastic because it aligns more naturally with the business cycle. Unlike traditional loans where you repay in fixed amounts regardless of your monthly revenue, this method flexes with your cash flow. When business is booming, payments increase, and when it’s slower, payments decrease. This funding model can relieve a lot of pressure on maintaining consistent cash reserves. It’s especially beneficial for seasonal businesses or startups scaling rapidly. The flexibility allows for reinvestment in growth without the worry of over-committing to fixed, high repayments, making long-term planning more adaptable to real-time business performance.
Sinoun Chea, CEO and Founder, ShiftWeb
Boost Marketing During Peak Seasons
One major benefit we’ve experienced from using revenue-based financing is the flexibility in repayment tied to our actual cash flow. Unlike traditional loans with fixed monthly payments, this model allowed us to scale our marketing efforts during peak seasons without the stress of overextending financially during slower months.
For example, when we launched a new service in South Florida, we used revenue-based financing to boost our ad spend and hire additional technicians. Since repayments were tied to a percentage of our revenue, we were able to reinvest confidently, knowing that the payments would adjust based on how well the business was performing.
It was a game-changer in helping us grow without sacrificing stability.
Access Capital Without Diluting Ownership
One benefit I’ve seen with revenue-based financing is how quickly it provides access to capital without diluting ownership. I remember collaborating with a D2C e-commerce startup that was seeing tremendous growth but struggled with cash flow due to high inventory costs.
They needed funds fast to manage upcoming supplier orders, but they weren’t keen on giving up equity at such an early stage. Revenue-based financing was the perfect fit since it was tied to their revenue, meaning repayments adjusted based on their monthly sales. This gave them breathing room during slower months and allowed them to stay fully focused on growth.
What stood out to me was how this flexibility let them scale operations without the looming stress of fixed loan repayments or losing control over their company. It’s a tool I wish more startups understood and used strategically—it’s like a financial Band-Aid with room to grow around it.
Niclas Schlopsna, Managing Consultant and CEO, spectup
Manage Cash Flow with Flexible Repayments
As someone who has used revenue-based financing, I see its major advantage in its flexibility. With repayments tied to revenue, I wasn’t locked into fixed monthly payments when sales dipped. This made capital management easier and supported healthier, more organic business growth.
Roberts Haligowski, COO, Big Jerrys Fencing
Fund Growth While Maintaining Strategic Control
In healthcare IT, where product development cycles can be long and regulatory demands high, RBF offers a breathing space: you raise capital without giving up equity, keeping control over long-term strategy. Based on my analysis of similar situations, leaders at startups like Hint Health or Welkin Health have successfully used RBF to scale their platforms, funding sales and marketing pushes tied to predictable recurring revenues.
The key advantage is flexibility. Unlike fixed bank loans or rigid venture capital timelines, RBF aligns repayments with cash flow. When revenue dips, so do repayments—a crucial cushion when selling healthcare SaaS products with seasonal sales or contract-based revenue. One CTO I spoke to emphasized that this “soft landing” allowed them to invest boldly in EHR integrations without the pressure of burning through a VC runway or meeting aggressive investor KPIs.
Of course, RBF isn’t without limits—the financing amounts depend on your existing revenue base, making it less useful for pre-revenue projects. But for post-revenue healthcare IT startups, it can be a strategic tool to extend runway, accelerate customer acquisition, and experiment with product-market fit, all while keeping your cap table clean.
In scenarios like these, I recommend founders weigh their growth targets, revenue predictability, and ownership goals carefully before choosing RBF—when applied thoughtfully, it’s not just capital, but a growth enabler.
Riken Shah, Founder & CEO, OSP Labs
Scale AI Infrastructure to Meet Demand
When we used revenue-based financing, it gave us the flexibility to scale quickly without the pressure of fixed monthly payments. This became especially helpful when we needed to expand our AI infrastructure to keep up with increasing demand from fashion brands. For example, last year we were able to invest in new AI models and enhance our technology without sacrificing cash flow. This resulted in a 51% increase in the number of clients we could serve in just six months. Instead of waiting for traditional funding rounds or taking on debt, the financing allowed us to pay back a percentage of our revenue, which adjusted based on how we performed. It gave us breathing room during peak periods and helped us stay nimble while growing at a fast pace.
Kirti Poonia, Founder, Caimera
Retain Authority While Obtaining Expansion Capital
The freedom to grow without surrendering control has been the greatest reward of revenue-based financing for my business.
Unlike conventional lending options that demand equity stakes, this financing model allowed me to retain full authority while obtaining the necessary capital for expansion opportunities.
I especially appreciated how payments flexed with our sales cycles, allowing us to pay more when business was strong and less during slower months. This natural alignment between what we earned and what we paid made our cash flow management much easier and removed the stress of meeting fixed obligations regardless of performance.
For any business owner weighing financing options, capital that moves in rhythm with your revenue isn’t just funding—it’s a true business partnership that respects your vision and ownership.
Matt Bowman, Founder, Thrive Local
Front-Load Campaigns for Rapid Growth
Thanks to revenue-based financing, I was able to front-load our paid search campaigns in Q2 of 2022, targeting high-demand UK-to-Australia and UK-to-Canada relocation routes. These campaigns typically take weeks to show full returns, but waiting that long would have slowed growth during peak season. The funding provided me with the flexibility to scale early, and within eight weeks, qualified leads across both routes increased by 31%. Repayments adjusted with our incoming revenue, which protected cash flow during slower weeks.
It eliminated the usual hesitation around timing and allowed me to act on opportunities instead of being constrained by budget cycles. I could bid more aggressively on high-intent keywords, test landing page variations faster, and extend campaign windows without cutting back elsewhere. That agility is difficult to achieve with fixed-term loans or while waiting for organic growth. The financing bridged the gap between strategy and execution during a critical quarter, and that momentum carried through to the rest of the year.
Hugh Dixon, Marketing Manager, PSS International Removals
Grow Inventory to Meet Seasonal Demand
One major benefit we experienced from using revenue-based financing was the ability to grow our inventory without taking on traditional loans. For example, when demand for custom engagement rings increased during the holiday season, we needed to quickly acquire more ethically sourced diamonds and gemstones to meet customer needs. Revenue-based financing allowed us to access the funds we needed based on our sales, rather than fixed payments like traditional loans. This gave us more flexibility.
Within just three months, we saw a 21% increase in sales, and the ability to scale up our inventory helped us meet customer demand without disrupting cash flow. The flexibility of paying back based on sales made this a manageable solution, allowing us to focus on growth rather than worrying about debt schedules.
For businesses looking to scale quickly without the pressure of fixed loan repayments, this can be a valuable option.
Yoad Bet Yosef, Owner, Nature Sparkle
Move Fast Without Sacrificing Business Control
Revenue-based financing helped me move fast without giving up control. I didn’t need to bring in investors or sign away equity. I needed capital to grow during peak season, and this option met me where the business was, scaling with our performance instead of fighting against it.
When storm damage hits, leads surge. Delays cost jobs. With traditional financing, I’d be stuck waiting on approvals or locked into fixed repayment terms. Revenue-based funding lets me hire crews, order materials, and start projects without hesitation. Payments matched revenue, so I wasn’t making the same payment during a slow month as I was during a busy one. That protected our margins and gave the team space to focus on execution, not survival.
It also gave me leverage when negotiating vendor pricing. With immediate cash flow, I could buy in bulk or pre-pay for priority delivery. That saved money and shortened timelines. The flexibility helped me strengthen the business from the inside; tightening operations, rewarding crews, and staying ahead of demand.
This only works if your business is already moving. You need reliable revenue and a clear view of your numbers; job costs, close rates, and average turnaround times. If you’re guessing, you’re gambling. But if you know your numbers, this model works.
Shantell Moya, Business Owner, Roof Republic
Launch Products During Tight Inventory Cycles
We used revenue-based financing to launch our high-volume collagen product during a tight inventory cycle. Our margins were strong, but cash was committed to fulfillment and support. We needed to scale fast without slowing down operations. The funding was tied to a percentage of daily revenue, which meant repayments adjusted automatically with performance. That structure removed the pressure of fixed terms and let us fund product design, labels, and content ahead of the launch window. Our team kept our core operating capital intact, which helped us hit inventory deadlines without cutting back on marketing.
What made this work was the predictable nature of our supplement sales. The repayment model mirrored our daily volume, which kept our risk low. We avoided the strain of traditional loans or giving up equity during an important phase of brand development. Revenue-based financing gave us a window to test the offer, gather early feedback, and scale it once we saw clear demand. That speed mattered. We moved from idea to launch in less than 40 days and covered the full advance within the first 90. If you’re managing a wellness brand with recurring revenue, this structure is worth considering for launch cycles.
Dr. Chad Walding, Chief Culture Officer and Co-Founder, NativePath
Navigate Cash Flow Challenges with Adaptability
A decade ago, I set up my own computer hardware shop. It has been tough to run since, particularly with respect to cash flow.
What changed the game for me was revenue-based financing. I wanted more money to purchase additional stock and perhaps even open a new branch, but the fixed payments of a traditional bank loan seemed terrifying.
Why did I select revenue-based financing? It is quite clear: in slower months (like post-holiday), I pay less in return. When business is booming (like during back-to-school), I pay more. This aligns with the actual workings of my business.
I recall just 2 years ago, when a nearby major office building was shut down. My business was hit by a 34% drop that month! If I had a bank loan, I would have been scrounging around trying to make the same payment. Because of revenue-based financing, my payment dropped too, giving me some room to breathe.
I did not need to give up equity in the company. This business is my baby—I built it from the ground up. I did not wish to have any investors dictating what I should or shouldn’t do.
The money I got helped me expand my inventory to include gaming computers, which turned out to be super profitable. I might not have taken that risky chance without the flexible financing.
For a small shop owner like me, having financing that goes up and down with my sales just makes sense. It feels less like a burden and more like a business partner who shares the ups and downs with me.
Maria Gonella, Managing Partner at Quantum Group, Quantum Jobs USA
Expand Inventory Without Traditional Loans
The biggest benefit of using revenue-based financing has been flexibility without sacrificing ownership. Unlike traditional loans or equity funding, revenue-based financing allowed us to scale based on actual cash flow without giving up control. This meant we could invest aggressively in marketing initiatives like lead capture automation and brand positioning while staying agile and debt-light, perfectly matching our growth curve without unnecessary financial pressure.
Haydn Price, Founder, V1CE
Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.
Photo by Woliul Hasan on Unsplash