Revenue-based financing (RBF) is a form of alternative financing that provides capital to businesses in exchange for a percentage of their future revenue. It is a financing model designed to support growth-oriented companies, particularly tech startups with recurring revenue(like SaaS, and subscription services), by offering them flexible funding options without the need for traditional collateral or fixed repayment schedules but based on their revenue.
It resembles merchant cash advance where the loan repayment is also based on future revenue. However, MCA's assessment tends to be more on using historical sales to try to project future revenue, such as from your POS machine.
While RBF is often equity-free and not considered an investment, the assessment method weighs heavier towards qualitative factors than just quantitative factors from your financial statements and thus is not something a broker can easily facilitate apart from just connecting the borrower and lender.