The ultimate guide to revenue-based funding in the UK
By Helm Editorial Team, Business Funding Specialists
- Revenue-based funding is capital repaid through a percentage of your ongoing revenue, not fixed monthly instalments
- It is closely related to merchant cash advances, which are a specific type of revenue-based funding tied to card sales
- Repayments automatically adjust to your income, protecting your cash flow during slower periods
- There is no equity dilution, no personal guarantees required in most cases, and no fixed term
- It is best suited to businesses with consistent, recurring revenue or regular card transactions
Revenue-based funding (RBF) is a type of business finance where you receive a lump sum of capital and repay it through a percentage of your ongoing revenue. Unlike a traditional loan, there are no fixed monthly payments. Instead, your repayments rise and fall in line with your actual income.
This model has gained significant popularity in the UK over the past decade, particularly among businesses with variable or seasonal income. It offers a middle ground between equity investment (where you give up a share of your company) and traditional debt (where you commit to rigid monthly payments regardless of how your business is performing).
How does revenue-based funding work?
The mechanics are straightforward. A funding provider gives your business a lump sum. In return, you agree to repay that sum, plus a fixed fee, through a percentage of your future revenue.
The percentage is agreed before you accept the funding and does not change. If your revenue is high in a given month, your repayment is higher. If revenue drops, your repayment drops with it.
The total cost is typically expressed as a fixed multiple of the amount you receive, similar to a factor rate. For example, if you receive £50,000 with a 1.3x multiple, your total repayment would be £65,000. This cost is fixed and does not increase over time.
Revenue-based funding vs merchant cash advance
A merchant cash advance is a specific type of revenue-based funding. The key difference is in how repayments are collected.
With a merchant cash advance, repayments are taken as a percentage of your daily card sales. This makes it ideal for businesses that process a high volume of card transactions, such as restaurants, pubs, salons, and retail shops.
Broader revenue-based funding can also draw from other income sources, including online payments, direct debits, and bank transfers. However, for most card-accepting UK businesses, a merchant cash advance is the most accessible and practical form of revenue-based funding available.
| Feature | Merchant Cash Advance | Revenue-Based Funding (General) |
|---|---|---|
| Revenue source for repayment | Daily card sales only | Total business revenue (various sources) |
| Collection method | Automatic from card terminal | Varies by provider |
| Typical business type | Card-heavy (hospitality, retail) | Subscription, SaaS, e-commerce |
| Speed of funding | 48 hours | 1 to 4 weeks |
| Funding range | £10,000 to £500,000 | £10,000 to £5 million |
Revenue-based funding vs bank loans
The fundamental difference between revenue-based funding and a bank loan is flexibility. A bank loan requires fixed monthly payments regardless of how your business is performing. Revenue-based funding adjusts automatically.
Bank loans also typically require strong credit, detailed business plans, and often security in the form of assets or personal guarantees. Revenue-based funding focuses primarily on your revenue history and consistency.
For businesses with predictable, steady revenue and excellent credit, a bank loan may offer a lower total cost. For businesses with variable income or those that need speed and flexibility, revenue-based funding is usually the better choice.
Revenue-based funding vs equity investment
One of the biggest advantages of revenue-based funding over equity investment is that you retain full ownership of your business. There is no dilution, no board seats, and no outside investors influencing your decisions.
Equity investment can provide larger sums and strategic support, but it comes at the cost of ownership and control. Revenue-based funding lets you access growth capital while keeping 100% of your business.
For established businesses that are already generating revenue, revenue-based funding is often the more practical choice. Equity investment tends to suit early-stage startups that need larger amounts and have high growth potential but limited current revenue.
Who is revenue-based funding best for?
Revenue-based funding works best for businesses that have consistent, demonstrable revenue and want flexible capital without giving up equity or committing to fixed monthly payments.
- Businesses that accept card payments and process at least £10,000 per month
- Subscription and SaaS businesses with recurring revenue
- Seasonal businesses that need capital before busy periods
- Businesses that have been turned down for bank loans due to credit issues
- Founders who want to retain full ownership and control of their business
- Companies that need speed, with funding required in days rather than weeks
How to access revenue-based funding with Helm
Helm offers merchant cash advances, which are the most accessible form of revenue-based funding for UK businesses that accept card payments.
You can check your eligibility in 60 seconds. There is no paperwork, no business plan, and only a soft credit check that does not affect your credit score. Most businesses receive a decision within 24 hours and funding within 48 hours.
If your business processes at least £10,000 per month in card sales and has been trading for at least 6 months, you are likely eligible for funding of up to 125% of your monthly card turnover.
Frequently asked questions
Is revenue-based funding the same as a merchant cash advance?
A merchant cash advance is a type of revenue-based funding. The difference is that MCAs specifically use card sales for repayment, while broader revenue-based funding can use other income sources.
Do I give up equity with revenue-based funding?
No. Revenue-based funding does not require you to give up any ownership of your business. You retain 100% control.
What happens if my revenue drops?
Your repayments decrease automatically. Because repayments are a percentage of your revenue, slower periods mean lower repayments. Your cash flow is always protected.
How is the cost calculated?
The cost is typically a fixed multiple of the amount you receive, similar to a factor rate. For example, a £50,000 advance with a 1.3x multiple means you repay £65,000 in total. The cost is agreed upfront and never changes.
How quickly can I get revenue-based funding?
With Helm, most businesses receive funding within 48 hours of approval. The application takes about 60 seconds and decisions are typically made within 24 hours.