How revenue based finance works
With revenue based finance a provider advances cash and you repay a fixed percentage of your revenue each month until you have paid back an agreed total, called the repayment cap. The cap is usually written as a multiple of the advance, so a cap of 1.3 means you repay 1.3 times what you were advanced. There is no interest rate on the balance: the cost is the cap less the cash you receive.
Because the payment follows revenue, a strong month repays more and a slow month repays less. The total stays the same, so the real cost to you depends on speed: the faster you repay the cap, the higher the annual rate. This calculator therefore shows the time to repay and the APR for the revenue path you enter, not just one fixed schedule.
Worked example: £50,000 with a 1.3 cap
Take £50,000 advanced with a repayment cap of 1.3, no upfront fee, monthly revenue of £40,000 and a revenue share of 8%. The total repayable is £65,000.00, so the finance costs £15,000.00, which is 30.00% of the advance. The first month's repayment is 8% of £40,000, or £3,200.00.
If revenue stays flat it takes 21 months to repay the cap, an average of £3,095.24 a month, because the last repayment is smaller. The APR is 36.07% as an effective annual rate. A £50,000 loan at 10% over the same 21 months would cost £2,605.24 a month and £4,710.06 in interest, so the revenue based finance costs £10,289.94 more.
Growing or shrinking revenue
Enter a monthly growth rate to see how a changing revenue line moves the repayment. With the example above and revenue growing 3% a month, the cap is repaid in 17 months instead of 21, an average of £3,823.53 a month. A faster repayment raises the annual cost: the APR rises from 36.07% on flat revenue to 42.62%.
Shrinking revenue works the other way. With a 10% share on £40,000 (a first repayment of £4,000.00) and revenue falling 2% a month, repayment takes 20 months instead of 17 on flat revenue, and the APR is 41.05% rather than 46.24%. A negative growth rate that is steep enough means the cap is never reached, so the calculator stops at 10 years and asks you to raise the share or revenue.
Upfront fees and the cap
Some providers also take a fee from the advance. Enter it as a percentage and the cash you receive falls while the cap still applies to the full advance. On £80,000 with a cap of 1.25 and a 2% fee, you receive £78,400.00 and repay £100,000.00, so the finance costs £21,600.00, which is 27.00% of the advance. With £60,000 of monthly revenue and a 6% share, the first repayment is £3,600.00, repayment takes 28 months and the APR is 23.51%.
Checking against a published example
Novuna publishes an illustration of revenue based finance: a business receiving £150,000 with a 1.4x repayment cap repays £210,000.00 in total, and with an 8% revenue share it repays £8,000.00 in a £100,000 month and £4,800.00 in a £60,000 month. Entering those terms reproduces the total and the first repayment. With revenue flat at £100,000 a month the cap takes 27 months to repay, an APR of 36.81%. Novuna says faster growth can shorten the repayment, which you can model with the growth rate.
If your provider quotes a factor rate and a fixed holdback on card sales instead, use the merchant cash advance calculator.
To turn any quote into an APR, use the business loan APR calculator.
What this calculator leaves out
This is a planning tool. It assumes your revenue follows a steady monthly percentage change, that the share applies to the revenue figure you enter, and that the provider takes the full share each month. Real agreements can define revenue differently (for example gross or net of refunds and VAT), set a minimum monthly payment or a maximum term, or pay out in several instalments, and none of that is modelled. It also does not model a tax saving on the finance cost.
The APR here is the annual rate at which your monthly repayments repay the cash you receive, so it can differ from a simple annualised percentage that some providers or guides quote. Use the figures in your offer to decide, and check how the agreement defines revenue and when the cap ends.
To compare with a conventional term loan, use the business loan calculator.
For short-term fixed-instalment finance, see the cash flow loan calculator.
Use the right country page
This page stays in pounds and uses UK terms: revenue based finance, upfront fee and APR as the effective annual rate. The country choices above the inputs open separate local pages. Choosing United States opens the US revenue based financing calculator, which uses dollars, an origination fee and a nominal annualised APR. The inputs reset and amounts are not converted.
Inputs for the revenue based loan calculator
Amount advanced
The cash the provider advances, before any upfront fee is taken from it.
Repayment cap
The most you repay, as a multiple of the advance. A cap of 1.3 means 1.3 times the advance.
Upfront fee
A percentage of the advance taken from the cash you receive. It raises the cost and the APR.
Monthly revenue
Your revenue in the first month of repayment, as the agreement defines revenue.
Share of revenue repaid
The percentage of each month's revenue paid to the provider until the cap is reached.
Monthly revenue growth
A steady monthly change in revenue. Use a negative number for shrinking revenue and zero for flat revenue.
Compare with a loan at
The yearly rate of a fixed-term loan of the same advance, repaid over the same number of months.
CALCULATOR QUESTIONS
UK revenue based loan calculator questions
How do you calculate a revenue based loan?
Multiply the advance by the repayment cap for the total repayable, then repay a fixed share of each month's revenue until that total is reached. £50,000 at a 1.3 cap is £65,000.00, and 8% of £40,000 is £3,200.00 in the first month.
How long does revenue based finance take to repay?
It depends on your revenue. On flat revenue of £40,000 with an 8% share, the £65,000.00 cap takes 21 months. If revenue grows 3% a month it takes 17 months.
Is there an interest rate on revenue based finance?
Usually not. The cost is the cap less the cash you receive, so £15,000.00 on the £50,000 example. The calculator turns that into an APR of 36.07% so you can compare it with a loan.
Why does repaying faster raise the APR?
The cap is fixed, so the same cost is paid over fewer months. Growth of 3% a month shortens the repayment from 21 to 17 months and lifts the APR from 36.07% to 42.62%.
What happens if my revenue falls?
The repayment falls with it and the repayment period gets longer. The total repayable stays capped, but the calculator stops at 10 years because a very small payment may never reach the cap.
How does it compare with a bank loan?
Enter a loan rate to compare. The example costs £10,289.94 more than a 10% loan over the same 21 months, but it asks for no fixed instalment and follows your sales.
What happens when I change country?
The United States option opens the separate US revenue based financing calculator, in dollars, with an origination fee and a nominal APR. Your inputs are reset rather than converted.