Revenue-based funding (RBF) offers a flexible way to manage cash flow by tying repayments directly to your sales. Here’s why it works:
- Payments Adjust to Sales: Pay a percentage of your revenue (e.g., 6%). If sales are $50,000, you pay $3,000. If sales drop to $30,000, you pay $1,800.
- Quick Access to Funds: Get funding in as little as 24 hours, based on your sales history.
- No Fixed Monthly Payments: Unlike traditional loans, payments scale up or down with your business performance.
- Automated and Easy: Connect platforms like Shopify, Amazon, or TikTok Shop to automate repayments.
This model helps eCommerce businesses maintain cash flow, invest in growth (inventory, marketing, etc.), and stay financially stable during slow periods.
The Basics of Revenue-Based Funding
Payment Structure: Percentage of Sales
Revenue-based funding offers a simple and flexible way to manage cash flow by tying repayments to a percentage of your sales revenue. Instead of dealing with fixed monthly payments, your business pays back the funding based on how much you earn. For instance, if your repayment rate is 6% and your monthly sales hit $50,000, your payment would be $3,000. If sales dip to $30,000 the next month, your payment adjusts accordingly to $1,800. This dynamic approach ensures that repayment matches your business’s performance, providing relief during slower periods and helping you maintain steady cash flow. Curious how this works seamlessly with your sales platform? Let’s dive into the tech behind it.
Platform Connections and Payment Processing
The beauty of revenue-based funding lies in its integration with modern sales platforms, making the entire process smooth and automated. By connecting directly to your eCommerce platform, this funding model eliminates the need for manual reporting or payment handling.
Here are some of the platforms it supports:
- Amazon
- Shopify
- TikTok Shop
- WooCommerce
- BigCommerce
- Squarespace
- Walmart Marketplace
These connections serve two purposes: first, they verify your sales history to determine funding terms, and second, they automate repayments. Every time a sale is made, the system calculates and deducts the appropriate payment amount. This automation not only reduces administrative tasks but also ensures payments are timely and accurate. Beyond that, the system evaluates factors like your sales trends, cash flow needs, and any existing debt to tailor funding offers that align with your business’s current and future potential.
"We're a modern lender that bases our lending decisions using your business performance data." - Onramp Funds
Cash Flow Improvements Through Revenue-Based Funding
Payments That Align with Your Sales
Revenue-based funding offers a payment structure that adjusts to your business's performance. Unlike traditional loans with fixed monthly payments, this approach ensures your repayments mirror your sales cycles. This means less financial strain during slower periods and more flexibility when business is booming.
For instance, if your eCommerce store sees a surge in sales during the holiday season, your payments will increase to reflect your stronger cash flow. On the flip side, during quieter months like February, your payments will automatically decrease, helping you preserve your cash reserves. This dynamic setup allows you to manage your finances more effectively and focus on what matters most - growing your business.
Keeping More Cash for Business Growth
One of the standout benefits of revenue-based funding is that it helps maintain a healthier cash flow. Since payments are tied to your revenue, you're not forced to dip into your working capital during critical growth periods. This gives you the breathing room to reinvest in your business without sacrificing liquidity.
With this flexibility, you can:
- Purchase inventory when prices are most favorable
- Launch marketing campaigns during peak sales seasons
- Handle operational expenses during expansion phases
- Keep an emergency fund for unexpected challenges
- Scale your business with confidence through secured inventory financing
By keeping more cash on hand, you’re better positioned to seize opportunities and navigate challenges.
Breaking Free from Fixed Monthly Payments
Traditional fixed repayments can be a burden, especially when sales fluctuate. Revenue-based funding removes this rigidity by automating payments based on your actual sales. No more worrying about meeting static deadlines during slow months or adjusting manually to account for changing revenue trends.
This system is especially helpful during periods of unpredictability, like seasonal sales spikes, market shifts, or product launches. Payments are automatically calculated and synced with your sales platform, ensuring they remain proportional to your revenue.
"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
Revenue-Based Financing: What Is It, and How Does It Work?
sbb-itb-d7b5115
Setting Up Revenue-Based Funding
Getting started with revenue-based funding is straightforward. Follow these steps to align your payments with sales and maintain a healthy cash flow.
Check Your Sales Requirements
First, confirm that your business meets the basic qualifications. To be eligible, your eCommerce store should generate an average of at least $3,000 in monthly sales. This benchmark ensures consistent revenue and helps determine your funding eligibility.
Your business must also meet these criteria:
- Be a registered legal entity (LLC, Single-Member LLC, C-Corp, or S-Corp)
- Operate within the United States
- Use a supported eCommerce platform
Unlike many traditional funding options, there’s no minimum time-in-business requirement. This makes revenue-based funding accessible to newer eCommerce businesses with strong sales performance. Meeting these qualifications positions your business to benefit from the flexible repayment structure.
Connect Your eCommerce Platform
Next, securely link your eCommerce store through a supported platform. This step allows the system to verify your sales history and generate a custom funding offer tailored to your business needs.
Set Up Payment Processing
The final step is setting up automated payment processing. This system ensures your payments are directly tied to your actual sales. Payments are calculated automatically, adapting to your business’s sales cycles, which helps maintain cash flow without the hassle of manual adjustments.
Once you review your funding offer, choose a percentage of sales for repayment, and activate the automated system, you’re all set. The process takes care of tracking and adjusting payments, so you can focus on growing your business while staying financially flexible.
These steps integrate smoothly into your cash flow strategy, making revenue-based funding an efficient and scalable option for eCommerce businesses.
Conclusion: Revenue-Based Funding for eCommerce Growth
Revenue-based funding offers a fresh approach to managing cash flow for eCommerce businesses, bringing several advantages discussed in this guide. By tying payment obligations to actual sales, it helps businesses stay financially stable while seizing growth opportunities. According to data, many businesses see revenue increases within just 180 days of securing this type of funding.
Real-world success stories highlight its effectiveness. The ability to access funding in as little as 24 hours and use it strategically - whether for inventory, marketing, or operations - makes scaling more efficient. This financing model not only simplifies cash flow management but also allows businesses to focus on expanding without the burden of rigid payment schedules.
With its adaptable, sales-based repayment structure and automated processes, revenue-based funding provides the flexibility eCommerce businesses need to grow sustainably. By eliminating the pressure of fixed payments, it enables companies to confidently explore new opportunities while aligning financial commitments with actual performance.
FAQs
How is revenue-based funding more flexible and adaptable than traditional loans?
Revenue-based funding aligns repayment amounts with your business's sales, offering a flexible solution for managing cash flow. When sales slow down, repayments decrease, easing the financial burden. This is a sharp contrast to traditional loans, which lock you into fixed monthly payments that can become challenging during periods of fluctuating revenue.
What makes this model appealing is how it adjusts to your income automatically, lowering financial risk. For eCommerce businesses, this setup can be especially helpful, allowing them to handle operational costs and invest in growth without the stress of rigid repayment deadlines.
Which types of eCommerce businesses can benefit the most from revenue-based funding?
Revenue-based funding is a great fit for eCommerce businesses dealing with fluctuating sales or seasonal spikes in demand. It’s particularly suited for sellers on platforms like Amazon, Shopify, TikTok Shop, WooCommerce, BigCommerce, Squarespace, and Walmart Marketplace.
What makes this funding approach appealing is its flexibility. Repayments are tied directly to your sales performance, which means you won’t feel the strain during slower months. This setup helps businesses manage cash flow more effectively, invest in inventory, and scale their operations - all without giving up equity.
How can I check if my eCommerce platform works with revenue-based funding, and how do I set up automatic repayments?
Confirming Platform Compatibility for Revenue-Based Funding
Before diving into revenue-based funding, it's crucial to ensure your eCommerce platform qualifies. Most major platforms, including Amazon, Shopify, Walmart, BigCommerce, WooCommerce, Squarespace, and TikTok Shop, are generally eligible.
How Automated Repayments Work
Getting started with automated repayments is straightforward. You'll securely link your store to share sales data, which helps create a funding offer tailored to your business. Repayments are then automatically deducted as a percentage of your sales. This approach adjusts to your business performance, making it easier to manage cash flow without added stress.
