Revenue-based financing is especially helpful for young businesses, startups, and operations that haven’t built up enough credit history to qualify for traditional loan products. They’re easily accessible, and funding times work fast, making them a great choice for businesses that need access to short-term capital.

But, revenue-based financing isn’t exclusive to the abovementioned businesses; Anyone can secure this type of financing to meet their goals.

Revenue-based financing is often thought of as a type of business loan, but the laws governing the two are significantly different. With revenue-based financing, the lender is essentially purchasing a percentage of your future sales at a discount.

You will receive an advance on your future revenue, which you’ll repay through a portion of your future revenue stream. Small business loans, on the other hand, involve a company lending you funds in exchange for fixed payments over a set schedule.

Business loans can have repayment terms of up to 25 years, whereas revenue-based financing is designed to be more of a short-term funding solution. Although they don’t come with set repayment terms, most revenue-based financing agreements are repaid within a year or less.

Revenue-based financing tends to have a higher APR compared to traditional business loans, but this is offset by the shorter repayment period. Basically, the structure means you’ll spend less time in debt.

Yes! While having good credit makes it easier and cheaper to secure financing, it’s still possible to reach an approval with a less-than-favorable credit score. In fact, many online lenders offer this type of financing with no minimum credit score requirements.

When you apply for revenue-based financing, your annual revenue and time in business will weigh heavier than your credit score. The structure allows new businesses and those without extensive credit histories to secure the funds they need to grow, but they’re also beneficial for established businesses to access the capital they need to navigate challenges and afford growth opportunities.

Every lender is different, and some may require a high credit score to qualify for revenue-based financing. This is especially common with banks and credit unions, but online lenders are generally the opposite. They’re more likely to consider your revenue, potential for growth, time in business, and other factors rather than your credit score.

Yes! When you apply for revenue-based financing with National, you could be eligible to receive funds in as little as 24 hours—or less.

Unlike traditional lenders, FundingBridgeLLC is a FinTech marketplace that allows you to receive multiple, competitive offers with one digital application. Our expert Business Finance Advisors work with you every step of the way, advising you on which opportunities would be the best fit for your specific circumstances.