Revenue-based financing (RBF) is a form of alternative financing that provides a business with a lump sum of working capital in exchange for a commitment to repay a predetermined total amount based on a fixed percentage of the business's future gross revenue. Repayment occurs as a percentage of each revenue period (e.g., monthly, or quarterly) until the agreed-upon total repayment cap is reached.
Lenders and funders may refer to this merchant cash advance (MCA) and Business Cash Advance (BCA). The main difference is that MCA is based on future card sales, repaid as a percentage of daily card transactions and BCA is based on overall revenue, repaid as a fixed daily/weekly withdrawal from the bank.