Revenue-based finance for UK businesses

• ecommerce businesses selling through their own website or online marketplaces
• subscription and software businesses with predictable recurring income
• food businesses selling through delivery platforms
• seasonal businesses that need to buy stock before peak trading
• growing businesses that want funding without giving up equity

Typical uses include stock, marketing and customer acquisition, hiring, equipment and technology, and short-term cash flow gaps.

Revenue-based finance is usually priced as a flat fee added to the advance, giving a fixed total repayable. Because the total is fixed, repaying quickly in strong months can make the effective annual cost high. Compare the total amount repayable with alternatives, and check whether repaying early reduces the fee.

Revenue-based finance is usually available to UK businesses with consistent, verifiable revenue and healthy gross margins, often online, subscription or platform-based. Providers assess:

• a UK business with some trading history
• the level and consistency of revenue, verified through bank, sales-platform or payment-processor data
• gross margins, to check the business can afford to give up a share of revenue
• existing borrowing and any other revenue already committed to a funder
• business and director credit history, although revenue performance usually matters more

Minimum trading periods and revenue levels vary by provider.

Revenue-based finance does not normally need property security: the provider relies on its right to collect an agreed share of your future revenue. Some ask for a personal guarantee; others do not, particularly on smaller advances. Where a guarantee is taken, it is often a performance guarantee, which applies if the business breaches the agreement (for example by moving sales to an account or platform the provider cannot see) rather than simply because revenue falls. On larger advances some providers also register a debenture over the company. Because the funder has a claim on your receipts, a second revenue-based or merchant cash advance provider will rarely fund alongside it. Our guides to personal guarantees and debentures explain what you are signing.

Revenue-based finance is one of the quicker forms of business funding, often moving from application to offer within a few working days. Speed comes from open banking and platform connections, which give the provider verified revenue data without waiting for statements or accounts. Funds are typically released soon after the agreement is signed and the collection mandate or platform split is set up. Larger advances, businesses with irregular revenue or those with existing funders taking a share of receipts usually take longer, as the provider may ask for management accounts, accounting software access or a settlement letter from the existing funder. Timescales depend on the provider and the case, so if you have a fixed deadline such as a stock order before peak season, start early.

Open banking lets you share read-only bank data securely with an authorised provider without handing over your login details. You choose what to share and can withdraw access at any time.

The main alternatives to revenue-based finance are fixed-repayment term loans, a revolving credit facility, invoice finance and secured loans, each of which is usually cheaper but less flexible when revenue dips.

• Unsecured business loans: fixed monthly repayments and usually lower overall cost, but less flexibility when revenue dips.
• Revolving credit facility: draw and repay as needed, paying interest only on what you use.
• Invoice finance: releases cash tied up in unpaid invoices, for businesses selling to other businesses.
• Secured loans: larger amounts and lower rates, with property or assets at risk.