Revenue-based finance vs business loans

By Bhavi Chadha · Updated 24 October 2026

How revenue-based finance compares with a business loan or line of credit, and which suits a growing ecommerce or SaaS business.

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In a nutshell

Revenue-based finance is funding sized on your recurring revenue rather than your assets or profits. Some providers take repayments as a share of your sales and charge a fixed fee, while others use fixed instalments. A business loan has a set repayment schedule and charges interest on the balance you owe. Revenue-based finance suits fast-growing ecommerce and SaaS businesses with predictable revenue; a business loan or line of credit often costs less for established businesses.

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At a glance

Sized on
Recurring revenue, not assets
Repayments
A share of sales, or fixed instalments
Cost
Fixed fee or interest, depending on the provider
Security
Often none for smaller amounts
Suits
Ecommerce and SaaS with predictable revenue
Dilution
None, unlike equity

How revenue-based finance works

Revenue-based finance lends against your recurring revenue: your monthly sales for an ecommerce brand, or subscriptions for a SaaS business. Instead of focusing on profits or property, providers look at how much revenue you bring in, how predictable it is and how fast it's growing, often by connecting to your sales platform, billing system or bank account.

There are two common models:

  • Share-of-sales advances, used by platform funders such as Shopify Capital and Wayflyer. You receive a lump sum and repay it, plus a fixed fee, as a percentage of each day's sales. When sales rise you repay faster; when they dip, repayments slow, but the fee stays the same.
  • Fixed-instalment growth capital, offered by specialist lenders. Funding is sized on your revenue, but repaid over a set term, much like a loan.

How a business loan works

A business loan gives you a lump sum with a fixed repayment schedule, daily, weekly or monthly depending on the lender. Interest is charged on the balance you still owe, so repaying sooner usually costs less. Lenders look at your cash flow, trading history and credit, and many non-bank lenders lend unsecured for smaller amounts. A line of credit is the flexible version: you draw what you need and pay interest only on that.

Comparing the cost

The two are priced differently, which makes them hard to compare at a glance. A fixed fee is the same whether you repay in four months or twelve, so it can be expensive when you repay quickly. Interest falls as you repay. The only reliable comparison is the total amount you'll repay on each offer, and when.

Which suits your business?

Revenue-based finance can suit you if:

  • you're growing fast and your revenue is predictable, such as subscriptions or steady online sales
  • you're not yet profitable, so a traditional lender may say no
  • you want funding that keeps you in control, without giving up equity

A business loan or line of credit can suit you if:

  • you're established, with a few years of trading and steady cash flow
  • you want the lowest total cost and a predictable repayment schedule
  • your needs are ongoing or seasonal, which suits a line of credit

For more detail, see our guides to SaaS finance, retail and ecommerce business loans and Shopify Capital and Wayflyer alternatives.

What lenders publish

Here's a selection of what lenders publish about funding for growing ecommerce and SaaS businesses. It isn't a full list of lenders or a ranking.

  • Tractor Ventures offers growth capital of $100,000 to $3 million over 12 to 36 months to eCommerce brands, software companies and other SMEs with $50,000 or more in predictable monthly revenue, unsecured and with no director's guarantee under $300,000. Profile →
  • Lumi's business loans and lines of credit go up to $1 million, mostly unsecured up to $300,000, for businesses trading 6 months or more with $50,000 or more in annual revenue. Profile →
  • Prospa's Small Business Loan goes up to $500,000, with no upfront security up to $150,000, for businesses trading 6 months or more with $6,000 or more in monthly turnover. Profile →

A sample of lenders, as published by each lender, checked 24 October 2026.

Revenue-based finance vs a business loan vs a line of credit

Sized on

Revenue-based finance
Recurring revenue and growth
Business loan
Cash flow, trading history and credit
Line of credit
Cash flow, trading history and credit

Repayments

Revenue-based finance
A share of sales, or fixed instalments
Business loan
Fixed, daily to monthly
Line of credit
Based on what you've drawn

Cost

Revenue-based finance
Often a fixed fee, whenever you repay
Business loan
Interest on the balance you owe, plus fees
Line of credit
Interest only on what you've drawn, plus fees

When sales dip

Revenue-based finance
Share-of-sales repayments fall, but the fee stays the same
Business loan
Repayments stay the same
Line of credit
You can draw less and repay as cash allows

Usually suits

Revenue-based finance
Fast-growing ecommerce and SaaS businesses with predictable revenue
Business loan
One-off costs for established businesses
Line of credit
Ongoing stock, marketing and seasonal needs

Related guides

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FAQs

Questions about revenue-based finance vs business loans

Revenue-based finance is funding sized on your recurring revenue, such as monthly sales or subscriptions, rather than your assets or profits. Some providers take repayments as a percentage of sales until the advance and a fixed fee are repaid; others use fixed instalments.

Often, but not always. A fixed fee on a short advance can work out more expensive than interest on a loan, especially if you repay quickly, because the fee doesn't fall. Compare the total amount you'll repay on each offer, side by side.

Fast-growing ecommerce and SaaS businesses with predictable revenue, particularly those that aren't yet profitable or don't have property to offer as security.

No. Like a business loan, it's debt, so you keep full ownership. That's the main reason founders use it instead of raising equity.

Yes. Both advance cash against future sales, take repayments as a share of revenue and charge a fixed fee. Our guide to Shopify Capital and Wayflyer alternatives compares them with Australian lenders.

Often, yes. Some lenders will pay out an existing advance as part of a new loan. Check your current agreement first, as many advances have a fixed fee, so repaying early may not save you anything.

No. There's no cost to you for our service. We're paid by the lender when your funding settles, and there's no obligation to proceed.

This page is general information only and isn't credit, tax or financial advice. Lender details are taken from each lender's published information, checked 24 October 2026, and can change. All lending is subject to each lender's credit criteria and assessment.