Revenue-Based Financing (RBF) is a flexible way for eCommerce businesses to fund inventory without taking on traditional loans or giving up equity. Instead of fixed payments, RBF links repayments to a percentage of sales, making it ideal for businesses with fluctuating revenue. Here's what you need to know:
- Repayment Flexibility: Payments adjust based on sales - lower sales mean smaller payments, and higher sales let you pay off faster.
- Quick Access to Funds: Funds can be available within 24 hours, perfect for urgent inventory needs.
- No Equity or Personal Credit Checks: Approval focuses on business performance, like sales history and cash flow trends.
- Great for Seasonal Businesses: Helps manage cash flow during slow months and stock up for peak seasons.
Quick Comparison: RBF vs. Standard Loans
| Feature | Revenue-Based Financing | Standard Loans |
|---|---|---|
| Payment Structure | Percentage of sales | Fixed monthly payments |
| Equity Requirement | No equity needed | May require collateral |
| Approval Speed | Often within 24 hours | Weeks or months |
| Credit Check | Not required | Typically required |
RBF helps eCommerce sellers maintain inventory, manage cash flow, and grow without the pressure of rigid repayment terms.
Revenue-Based Financing: What Is It, and How Does It Work?
RBF Process and Steps
Getting revenue-based financing (RBF) for inventory is a quick and straightforward process. Let’s break down the main steps and explain how the payment system works.
Getting Approved for RBF
Approval for revenue-based financing focuses on your business performance rather than personal credit scores. To qualify, your business must show at least $3,000 in average monthly sales and be a legally registered entity in the United States. The process starts by connecting your eCommerce store to receive an initial funding estimate.
"Onramp's process is very straightforward and easy to navigate. I had funds in my account within a day of final approval." - Adam B., The Full Spectrum Company
Funding decisions are based on three key factors:
- Sales history
- Cash flow trends
- Current debt levels
Payment Structure
Payments for RBF are tied directly to your sales deposits. A set percentage of your incoming payments is automatically applied toward repaying the financing.
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" - Torrie V., Founder and Owner of Torrie's Natural
This setup works well for businesses with seasonal or fluctuating sales. During slower months, repayments are naturally lower, while higher sales months allow you to pay off the financing faster. This approach helps avoid putting unnecessary pressure on your cash flow.
Funding Timeline
The process is designed to move quickly, making it ideal for businesses with urgent inventory needs. Nick James, CEO of Rockless Table, shared his experience: "Applied, got our offer, and had cash in our bank account within 24 hours. Their Austin, TX based team was very professional and helped me deploy the cash to effectively grow our business".
Here’s a breakdown of the funding timeline:
| Stage | Duration | Key Actions |
|---|---|---|
| Initial Application | A few minutes | Connect your store and get pre-qualified |
| Review & Approval | Same day | Business metrics are evaluated |
| Fund Disbursement | Within 24 hours* | Funds are transferred to your account |
| First Payment | After first deposit | Automatic percentage-based repayment begins |
*Note: Actual transfer times may vary due to ACH processing.
Once the funds are in your account, you can immediately use them to improve inventory management and meet your business goals.
RBF for Inventory Management
RBF offers eCommerce businesses funding options that align with their sales cycles, helping them manage both inventory and cash flow effectively.
Managing Cash Flow and Stock
Good inventory management means finding the right balance between stock levels and available capital. With RBF, businesses can secure funds to purchase inventory when needed, while keeping cash available for other operational needs. The repayment model, tied to sales, ensures businesses can maintain stability across operations.
| Inventory Management Aspect | RBF Advantage |
|---|---|
| Stock Purchasing | Access capital for bulk inventory orders |
| Cash Flow Impact | Payments scale with sales performance |
| Working Capital | Preserve funds for day-to-day operations while investing in stock |
| Order Timing | Buy inventory when prices are favorable |
Seasonal Inventory Planning
Seasonal businesses often struggle to prepare for high-demand periods like holidays or promotional events. RBF allows these businesses to stock up ahead of time without the pressure of rigid repayment terms. During slower periods, the flexible repayment model helps ease financial strain.
"Onramp has simplified cash flow by automating everything: easy to request, set it and forget it payments - quick and fast!" - Torrie V., Founder and Owner of Torrie's Natural
This adaptability also helps safeguard your supply chain.
Supply Chain Protection
In addition to supporting inventory needs, RBF helps businesses protect their supply chains. It provides the financial flexibility to maintain safety stock, manage lead times, diversify suppliers, and quickly address disruptions.
With adjustable payments, businesses can navigate challenges like supply delays without compromising cash flow. RBF funding can be applied to several key areas, such as:
- Inventory purchases
- Shipping and logistics expenses
- Warehouse operations
- Supply chain adjustments
This approach ensures businesses can maintain the right stock levels while staying resilient against supply chain issues and seasonal demand changes.
sbb-itb-d7b5115
RBF Example for eCommerce
Examples help illustrate how revenue-based financing (RBF) can support eCommerce businesses with inventory funding. Let’s break it down with a real-world case study.
Sample Funding Scenario
Here’s a look at how an eCommerce business might use RBF for inventory financing:
| Funding Stage | Details |
|---|---|
| Initial Need | Capital for inventory purchases |
| Application Process | Simple online application |
| Funding Timeline | Funds delivered within 24 hours |
| Repayment Structure | Percentage of sales revenue |
| Business Impact | Improved inventory planning and cash flow |
Rockless Table’s story highlights how RBF can enhance business operations. CEO Nick James shared his experience:
"Applied, got our offer, and had cash in our bank account within 24 hours. Their Austin, TX based team was very professional and helped me deploy the cash to effectively grow our business."
This type of funding allows businesses to address key needs like inventory purchases, shipping costs, marketing, and operational expenses - all with a repayment plan tied to revenue, making it easier to manage cash flow.
Onramp Funds Services
Onramp Funds provides revenue-based financing designed specifically for eCommerce sellers to address their inventory needs. By connecting directly with major eCommerce platforms, it enables fast funding decisions based on real-time store performance. Here's a closer look at its main features and straightforward fee structure.
Onramp Funds Main Features
Onramp Funds focuses on offering quick and adaptable funding solutions to help eCommerce businesses manage inventory effectively:
| Feature | Description | Benefit |
|---|---|---|
| Quick Funding | Funding processed within 24 hours | Fast access to inventory capital |
| Platform Integration | Works with Amazon, Shopify, Walmart, TikTok Shop, and more | Easier qualification process |
| Flexible Repayment | Payments tied to sales revenue | Improved cash flow management |
| Store Performance Analysis | Funding decisions based on store metrics | Customized funding options |
| US-Based Support | Support team located in Austin, TX | Personalized assistance |
Fees and Support
Onramp Funds charges a clear fee ranging from 2% to 8%, depending on the funding amount and business performance. This transparent structure avoids hidden costs and aligns repayment terms with your sales cycle, making it easier to manage cash flow.
When evaluating inventory funding, the platform considers factors like sales history, cash flow, existing debt, and seasonal trends to ensure a tailored approach for each business.
Summary
RBF offers a practical way for eCommerce businesses to secure capital, as shown by companies like Kindfolk Yoga, which used it to improve inventory management.
Here are some key features of RBF:
- Payments adjust automatically based on sales
- Funding decisions made within 24 hours
- Capital available for inventory, shipping, and marketing
- Eligibility determined by store performance metrics
Onramp Funds works with major eCommerce platforms and charges a simple fee between 2-8%. Nick James, CEO of Rockless Table, shared his experience:
"Applied, got our offer, and had cash in our bank account within 24 hours. Their Austin, TX-based team was very professional and helped me deploy the cash to effectively grow our business".
This sales-driven funding model helps eCommerce sellers quickly access the resources they need to maintain inventory, manage cash flow, and support growth.
FAQs
How is Revenue-Based Financing less risky than traditional loans for eCommerce businesses?
Revenue-Based Financing (RBF) offers a more flexible and adaptive repayment structure compared to traditional loans, making it a lower-risk option for eCommerce businesses. With RBF, repayments are tied to a percentage of your sales, so if your revenue slows down during certain months, your payments automatically adjust to reflect that. This helps align repayment with your cash flow.
In contrast, traditional loans often come with fixed payment schedules, which can be difficult to manage during periods of fluctuating sales. For eCommerce businesses that experience seasonal demand or unpredictable revenue, RBF provides a tailored solution that reduces financial strain and supports growth without the burden of rigid repayment terms.
What do eCommerce businesses need to qualify for Revenue-Based Financing?
To qualify for revenue-based financing through Onramp Funds, your business must meet a few key requirements. You need to operate as a legal business entity in the United States and sell on a supported eCommerce platform, such as Amazon, Shopify, TikTok Shop, WooCommerce, BigCommerce, Squarespace, or Walmart Marketplace. Additionally, your business should generate at least $3,000 in average monthly sales.
This flexible financing option is designed to help eCommerce sellers manage cash flow, invest in inventory, and scale their operations with repayment terms based on a percentage of sales.
How does Revenue-Based Financing support seasonal eCommerce businesses in managing inventory and cash flow?
Revenue-Based Financing (RBF) offers seasonal eCommerce businesses a flexible way to secure funding for inventory and cash flow needs. Unlike traditional loans, repayments are tied to a percentage of your sales, meaning payments adjust based on your revenue. This ensures you’re not overburdened during slower sales periods while still having the capital to stock up for peak seasons.
By aligning repayments with your sales performance, RBF helps you maintain financial stability, invest in growth, and manage the unique challenges of a seasonal business cycle effectively.
