Revenue-based financing (RBF) is a funding option for eCommerce businesses that allows you to repay a percentage of your monthly revenue instead of fixed payments. Here’s what you need to qualify:
- Business Setup: Must be a registered LLC, C-Corp, or S-Corp in the U.S. with an EIN and necessary licenses.
- Operational History: Typically 6–12 months in business, though some providers accept shorter histories with consistent sales.
- Revenue Requirements: Monthly sales of at least $3,000 (or $100,000 annually) with steady, trackable income.
- Platform Compatibility: Use supported platforms like Amazon, Shopify, or WooCommerce with API integration for sales data.
- Documentation: Be prepared with corporate documents, a business bank account, and up-to-date financial records.
RBF is fast, flexible, and doesn’t require personal guarantees or equity. Payments adjust based on your sales, and funds can be available in as little as 24 hours. If your business meets these criteria, you’re ready to apply.
What Is Revenue-based Financing? - BusinessGuide360.com
Step 1: Check Your Business Requirements
Before jumping into revenue figures or setting up platform connections, it's crucial to confirm that your business meets the basic structural criteria required by revenue-based financing (RBF) providers. These initial checks are essential for moving forward with your application and passing the first round of evaluations. Here’s what you need to address:
Legal Business Registration
Your business must be formally registered as an LLC, corporation, or a similar entity. RBF providers prefer working with structured businesses because it ensures a clear separation between personal and business finances, while also allowing for accurate tracking of revenue.
Onramp Funds, for instance, works with businesses registered as LLC, Single-Member LLC, C-Corp, or S-Corp operating in the United States.
To meet this requirement, gather the following documents:
- Employer Identification Number (EIN) issued by the IRS
- Certificate of Formation or Articles of Incorporation
- Necessary business licenses or permits
Make sure the name on your business registration matches the name you use for financial records and platform accounts.
6-12 Months in Business
Most RBF providers expect businesses to have at least 6-12 months of operational history. This timeframe helps them assess your revenue stability and ability to handle fluctuations over time.
Onramp Funds, however, does not require a minimum operational period for eCommerce sellers - as long as you meet other conditions, like maintaining an average of $3,000 in monthly sales. This approach acknowledges that digital businesses can grow quickly and demonstrate reliability through sales data rather than traditional longevity metrics.
Typically, RBF providers base funding offers on your average revenue over the past three months. However, they also consider longer operational histories to ensure that recent earnings are part of a steady trend, not just temporary spikes.
If your business is under six months old, focus on building consistent revenue and keeping meticulous financial records.
Good Standing Status
Your business must be active, compliant with all regulations, and free of unresolved legal or financial issues to qualify for RBF. Being in good standing means you’ve kept up with state registration fees, filed annual reports, avoided lawsuits or tax liens, and adhered to licensing requirements.
RBF providers value businesses in good standing because they’re seen as lower-risk and more likely to maintain the steady revenue needed for repayment. For eCommerce businesses, this includes compliance with sales tax collection and marketplace facilitator taxes across all states where you operate.
To confirm your good standing, obtain a Certificate of Good Standing from the state where your business is registered. Additionally, ensure you have no recent bankruptcies, defaults on previous loans, or significant unpaid debts with government agencies that might affect your ability to repay financing.
Step 2: Review Revenue Requirements
Once your business setup is validated, the next step is to demonstrate your revenue capability. This involves showing that your sales meet specific minimum thresholds and follow a consistent, verifiable pattern. Let’s dive into the key revenue benchmarks you’ll need to hit.
Monthly Revenue Minimums
Most revenue-based financing providers expect businesses to generate at least $3,000 in monthly revenue or reach $100,000 in annual sales to qualify for funding. However, these requirements can vary depending on the lender's risk assessment. For instance, some providers may set higher thresholds, requiring up to $7,500 per month or more in annual sales.
Onramp Funds, for example, sets a minimum of $3,000 in average monthly sales for eCommerce businesses. This relatively low threshold is designed to accommodate smaller sellers while still ensuring they can reliably handle percentage-based repayments.
These revenue benchmarks are essential for ensuring your business has enough cash flow to manage repayment obligations without disrupting daily operations.
| Revenue Requirement | Typical Range | Industry Standard |
|---|---|---|
| Monthly Revenue | $3,000 – $7,500 | $3,000 – $7,500 |
| Annual Revenue | $100,000 – $250,000 | $100,000 – $250,000 |
| Repayment Percentage | 3% – 8% of revenue | 3% – 8% of revenue |
While meeting these thresholds is crucial, lenders also prioritize consistent and traceable sales performance.
Steady and Trackable Sales
Hitting revenue minimums is just one part of the equation. Lenders also need to see that your sales are steady and easy to verify. This ensures that repayment remains manageable, even during slower months.
"We're a modern lender that bases our lending decisions using your business performance data. Our secure platform connections will review your sales history and create a customized cash offer for you", explains Onramp Funds.
To verify sales, lenders typically review reports, bank statements, or connect directly to eCommerce platforms like Amazon, Shopify, or Stripe. These connections allow them to assess your revenue's stability and predictability in real time.
Onramp Funds simplifies this process by using secure platform integrations to automatically pull sales data. This eliminates the need for manual document submissions and gives lenders a clear view of your business’s performance.
For businesses with fluctuating or seasonal sales, additional scrutiny may apply. Lenders often average revenue over longer periods to account for natural business cycles, which can impact the terms you receive.
"We evaluate your sales history, cash flow needs, and debt positions to make you an offer that fits with your cash flow capability. We structure your financing to ensure you're not putting your business at risk with too much debt", states Onramp Funds.
For eCommerce sellers, maintaining detailed sales records across all platforms is key. It’s equally important to ensure your business banking clearly reflects these sales deposits. The more consistent and transparent your revenue patterns, the better your chances of qualifying for favorable terms and larger funding amounts.
Step 3: Verify Platform Compatibility
To access revenue-based financing, your store must connect to financing providers using secure API connections. Without this integration, accessing funding can be challenging.
Supported eCommerce Platforms
Revenue-based financing providers rely on API integrations to quickly and accurately assess your business. This means your store needs to operate on a platform that supports secure, real-time data sharing.
Onramp Funds works with a wide variety of popular eCommerce platforms, covering most U.S. online sellers:
| Platform Type | Supported Platforms |
|---|---|
| Marketplaces | Amazon, Walmart Marketplace, TikTok Shop |
| Hosted Solutions | Shopify, BigCommerce, Squarespace |
| Self-Hosted | WooCommerce |
| Payment Processors | Stripe |
| Emerging Platforms | Shopline |
These platforms offer reliable API integrations, allowing providers to access sales data automatically.
If you sell across multiple platforms, providers can combine data from all your supported channels for a complete view of your business. For example, selling on both Amazon and Shopify? Onramp Funds can merge revenue data from both, which may increase your funding eligibility.
However, if your primary platform isn’t supported, you might face delays. Some providers may offer manual reviews, but these often require more documentation and take longer to process.
After confirming platform compatibility, the next step is understanding the data permissions required for integration.
Data Access Requirements
Once you’ve ensured your platform supports integration, it’s essential to understand the type of data financing providers need. This access helps verify your consistent and trackable sales.
Secure API integrations allow for automated decisions and funding within 24–48 hours. Providers rely on real-time, read-only access to your sales data for their evaluations.
The integration process involves granting read-only permissions to your store’s backend. This gives providers visibility into your sales history, revenue trends, and key performance metrics without altering your store or accessing sensitive customer information.
Typically, providers require at least six months of sales data to assess your business’s stability and growth. The data reviewed often includes gross sales, refunds, chargebacks, and net revenue.
Connecting your store to Onramp Funds, for instance, is quick and secure. The process takes only a few minutes and uses encrypted connections, adhering to strict security standards like PCI DSS. This ongoing data connection also allows repayments to adjust automatically based on sales fluctuations.
Before starting the integration, ensure your sales data across all platforms is accurate and up to date. Any inconsistencies between your records and the automated feed could delay approval or impact funding terms. It’s also wise to double-check your platform’s API permission settings to understand what data will be shared.
sbb-itb-d7b5115
Step 4: Prepare Required Documents
Once you've confirmed your platform compatibility, it's time to gather the necessary paperwork for your revenue-based financing application. While much of the process relies on secure API integrations, having the right documents ready is still crucial.
Document Checklist
Modern revenue-based financing providers have simplified documentation by using secure platform connections to verify your information. Here's what you'll typically need:
- eCommerce Store Integration: Link your store (Amazon, Shopify, BigCommerce, WooCommerce, Squarespace, Walmart Marketplace, TikTok Shop) to your financing provider using the connections you set up in Step 3.
- Business Bank Account: Connect your account to allow the provider to review cash flow patterns and assess your existing debt.
- Corporate Documents: Keep your Articles of Incorporation, business licenses, and EIN documentation handy for the application.
Occasionally, additional documents may be requested, such as recent tax returns, owner identification (like a driver’s license or passport), or specific sales reports if there are issues with platform integration. These requests are rare but worth noting.
Once you've organized everything, you're ready to move on to the financial review phase.
Credit and Financial Reviews
In addition to documentation, your business’s cash flow and credit data will be briefly assessed. The good news? Revenue-based financing often skips traditional credit checks. Most providers prioritize your business's revenue and performance over your personal credit history. If a credit review is conducted, it's usually basic, with a minimum score requirement of around 500.
During the financial review, providers focus on key metrics from your connected accounts, such as:
- Monthly revenue consistency
- Average transaction size
- Cash flow trends
- Recurring revenue streams, if applicable
"We're a modern lender that bases our lending decisions using your business performance data." - Onramp Funds
A steady sales history and well-organized financial records can improve your approval odds and lead to better funding terms. Many providers use automated systems to analyze your data, often delivering funding decisions within 24–48 hours after receiving all required information.
To keep things moving smoothly, double-check that your platform integrations are active and that your sales data is accurate and up-to-date. Ensure your business registration documents are current, and provide the necessary read-only access to your accounts.
This efficient process allows you to focus on growing your business while the provider takes care of the technical details - perfect for securing quick access to working capital for inventory, marketing, or other needs.
Step 5: Review Repayment Terms
Once you’ve secured funding and gathered the necessary documentation, it’s time to evaluate the repayment terms. These terms directly affect your cash flow, and unlike traditional loans with fixed monthly payments, this model offers flexible repayment options that adapt to your business's performance.
Percentage-Based Payments
With revenue-based financing, repayments are calculated as a fixed percentage of your monthly revenue, typically between 3% and 8% of your gross receipts. This means your payments fluctuate based on your actual sales.
For example, at a 5% repayment rate, a monthly revenue of $50,000 would result in a $2,500 payment, while $30,000 in revenue would reduce the payment to $1,500. The system adjusts automatically to your sales performance.
"Your payments sync with your sales, you'll never have to worry about your ability to repay during a slower month. You pay us when you receive sales deposits." - Onramp Funds
Repayments continue until you reach the agreed-upon repayment cap, which is typically a multiple of the original funding amount, often between 1.3x and 1.5x the principal. For instance, if you receive $150,000 in funding with a 1.4x cap, you’ll repay $210,000 in total, regardless of how long it takes. The repayment period is tied to your revenue, so payments stop once the cap is met.
Now, let’s explore how this repayment structure supports your financial independence and ownership.
No Equity Required
One of the standout benefits of revenue-based financing is that it’s completely equity-free. You don’t have to give up any ownership or control of your business to secure funding. This allows you to retain full decision-making authority and 100% of your company’s future value.
Additionally, there are no personal guarantees required, which means your personal assets remain protected. This is a significant advantage over traditional business loans, which often require personal collateral, exposing your personal finances to risk.
Because this financing doesn’t dilute ownership, it’s particularly appealing to eCommerce businesses looking to scale without giving up control or bringing on investors who might influence key decisions.
Clear Fee Structure
Another key feature of revenue-based financing is its transparent fee structure. Providers typically disclose all fees upfront, so there are no surprises later. The primary cost is usually a flat fee or commission, expressed as a percentage of the funded amount, often between 6% and 9%. This fee is agreed upon before you accept the funding and is factored into the repayment cap.
For example, borrowing $100,000 with a 7% fee and a 1.4x repayment cap means you’ll repay $140,000 in total, with no hidden charges.
When comparing offers, it’s important to understand the total cost of capital and weigh it against other funding options. While revenue-based financing can sometimes be more expensive than traditional loans - especially if your business grows quickly and reaches the repayment cap faster - the flexibility and speed it offers often make it a worthwhile choice for growing eCommerce businesses.
Reputable providers will provide a clear, written agreement that outlines all repayment terms, fees, and mechanics upfront. This level of transparency ensures you can make informed decisions about whether the financing aligns with your business goals and cash flow needs.
Conclusion: Ready to Apply?
This checklist is your guide to meeting the essential criteria for revenue-based financing, a key step in scaling your eCommerce business. Once you've completed the checklist, evaluate whether your business qualifies. To be eligible, confirm these requirements: U.S. legal registration, an average of $3,000 in monthly sales, operation on a supported platform like Amazon or Shopify, and complete, up-to-date documentation.
If you find any gaps - whether in revenue, registration, or paperwork - address them before applying to ensure a smoother process.
It’s a good idea to revisit these criteria regularly. As your business evolves, your eligibility might change. Assess your status quarterly or whenever major shifts occur, such as changes in revenue, business structure, or sales platforms. Staying proactive ensures you're always prepared for funding opportunities.
Once you’ve reviewed the requirements and gathered your documentation, you're ready to take the final step. If you meet all the qualifications, you're well-positioned to proceed. Onramp Funds has streamlined the process - providing an initial funding estimate in just one minute and a pre-qualification offer within five minutes after securely connecting your account. The best part? Funds can typically be deposited into your bank account within 24 hours of completing the qualification process.
"Onramp offered the perfect solution with revenue-based financing to secure the capital we needed to invest in inventory and pay it back at a reasonable time frame once we made sales." - Jeremy, Founder and Owner of Kindfolk Yoga
This approach is particularly helpful for businesses experiencing seasonal fluctuations or rapid growth, as repayments adjust based on your revenue.
The secret to making revenue-based financing work for you lies in keeping accurate financial records and fully understanding how repayment aligns with your cash flow. Onramp Funds provides a fast, secure, and customized solution for qualified sellers. With over 3,000 eCommerce loans already issued and an A+ rating from the Better Business Bureau, this financing option has proven to be a reliable tool for businesses ready to expand their operations.
FAQs
What are the benefits of using revenue-based financing for eCommerce businesses?
Revenue-based financing comes with a host of benefits that make it an attractive option for eCommerce businesses. One standout advantage is the speed of funding - you can secure the capital you need in as little as 24 hours. This quick turnaround allows businesses to act on growth opportunities without unnecessary delays.
Another perk? It's equity-free financing, meaning you don't have to give up ownership or control of your business. You keep 100% of your hard-earned stake while still gaining the funds to scale.
What really sets this financing apart is its flexible repayment model. Payments are tied to your revenue, so during slower months, your repayment amount adjusts accordingly. This structure helps you maintain healthier cash flow and provides a financing option that works in sync with the ups and downs of eCommerce sales.
How do I check if my eCommerce platform works with revenue-based financing, and what are my options if it doesn’t?
To determine if revenue-based financing is an option for your business, first confirm that your eCommerce platform is supported by the financing provider. Onramp Funds partners with well-known platforms such as Amazon, Shopify, BigCommerce, WooCommerce, Squarespace, Walmart Marketplace, and TikTok Shop.
If your current platform isn’t on the list, you might explore switching to a compatible one to access these financing opportunities. Alternatively, you can contact the provider directly for advice on next steps or to discuss customized solutions that suit your business needs.
How can I improve my eligibility for revenue-based financing if I don’t meet the revenue or operational history requirements?
If your business doesn’t yet meet the revenue or operational history criteria for revenue-based financing, aim to increase your monthly sales to at least $3,000. You might reach this goal by refining your marketing strategies, introducing new products or services, or enhancing how you retain customers.
It’s also important to maintain steady sales and build a reliable operational history. Showcasing strong financial management and outlining clear plans for growth can further highlight your business’s readiness to secure funding.
