A loan and an RBF are two different types of funding used by businesses, and they come with distinct differences. A loan is a type of debt where a lender, often a bank, provides a lump sum of money upfront, and the borrower repays the amount over a set period with interest. The repayment schedule is usually monthly and the interest rate is typically fixed.
On the other hand, an RBF is a short-term funding option where the lender provides a lump sum of money that the borrower repays through a fixed percentage of their future sales. Also, instead of an interest rate, cash advances use a factor rate to calculate the total repayment amount. This makes cash advances a flexible, but often more expensive, option than traditional business loans.