The Dos and Don’ts of Repaying Revenue-Based Funding in a Timely Manner

You’ve secured revenue-based funding for your business – now it’s time to ensure you repay it on time and in full. In this blog post, we’ll cover the essential dos and don’ts of repaying revenue-based funding to help you navigate this financial commitment with ease. Stay tuned for expert tips and advice to keep your business on track and thriving!

Introduction to Revenue-Based Funding

Revenue-based funding, also known as revenue sharing or income sharing, is a type of financing where a business receives funding in exchange for a portion of its future revenue. It has gained popularity in recent years as an alternative to traditional forms of financing such as loans or equity investments.

Unlike loans, revenue-based funding does not require businesses to make fixed monthly payments. Instead, the repayment schedule is based on a percentage of the business’s monthly revenue, typically ranging from 1% to 10%. This means that during slow months, businesses have lower repayments and during high-revenue months, they pay more towards their funding.

This form of financing can be beneficial for businesses with irregular cash flows or seasonal sales patterns. It can also be appealing for startups and small businesses that may struggle to qualify for traditional loans due to limited credit history or collateral.

However, like any other form of financing, there are certain dos and don’ts when it comes to repaying revenue-based funding in a timely manner. In this article, we will discuss some important considerations that businesses should keep in mind in order to successfully repay their revenue-based funding.


1. Understand the terms and conditions: Before signing any agreement for revenue-based funding, it is crucial to thoroughly understand all the terms and conditions involved. This includes knowing the percentage of revenue that will go towards repayment, the duration of the repayment period, and any potential penalties for late payments.

2. Have a clear repayment plan: Businesses should have a solid plan in place for how they will use the funds received from revenue-based funding and how they will generate enough revenue to cover their repayments.

3. Monitor your cash flow regularly: Since repayments are tied directly to business revenues, it is important for businesses to closely monitor their cash flow on a regular basis. This will help them stay on track with their repayments and make adjustments if necessary.

4. Communicate with the funding provider: In case of any financial setbacks or difficulties in meeting repayment obligations, it is important to communicate openly and regularly with the funding provider. They may be able to offer alternative solutions or temporarily adjust the repayment schedule.


1. Overestimate your revenue projections: When applying for revenue-based funding, businesses should avoid overestimating their future revenues. This can result in unrealistic repayment expectations and potentially lead to defaulting on the funding.

2. Neglect other financial obligations: While repaying revenue-based funding should be a top priority, businesses should not neglect other financial obligations such as paying employees or vendors. It is important to balance all financial responsibilities and prioritise them accordingly.

3. Ignore changes in business operations: If there are any significant changes in business operations that could impact revenues, it is important to inform the funding provider and make adjustments to the repayment plan if necessary.

Revenue-based funding can provide businesses with much-needed capital without the burden of fixed monthly repayments. By following these dos and don’ts, businesses can

The Dos of Repaying Revenue-Based Funding

When it comes to repaying revenue-based funding, there are certain best practices that you should follow in order to ensure timely and successful repayment. These “dos” are important to keep in mind throughout the entire repayment process, from the initial agreement with your funder to making regular payments.

1. Do fully understand the terms of your agreement: Before signing any contract for revenue-based funding, make sure you fully understand all the terms and conditions laid out by your funder. This includes the repayment schedule, interest rate, and any other fees or penalties that may apply. It’s important to be aware of these details so that you can plan accordingly and avoid any surprises down the line.

2. Do have a clear understanding of your cash flow: Revenue-based funding is based on a percentage of your monthly income, so it’s crucial to have a clear understanding of your business’s cash flow. This will help you determine how much you can comfortably afford to repay each month without putting strain on your finances.

3. Do prioritise your payments: Make sure that repaying your revenue-based funding is one of your top financial priorities. Set aside funds specifically for this purpose each month so that you don’t fall behind on payments or incur late fees.

4. Do communicate with your funder: If for some reason you are unable to make a payment on time, it’s important to communicate this with your funder as soon as possible. They may be willing to work with you and come up with a solution that works for both parties.

5. Do maintain accurate financial records: Keeping detailed records of all expenses and income will not only help you stay organised but also allow for easier tracking of how much revenue has been generated and how much has been paid towards the loan.

6.Do consider early repayment options: Some revenue-based funders offer discounts or incentives for early repayment, which can save you money in interest over time. If possible, it may be worth considering paying off your loan earlier than the agreed-upon term.

Following these dos of repaying revenue-based funding will not only help you stay on track with your payments but also maintain a good relationship with your funder. Remember, open communication and responsible financial management are key to successful repayment.

The Don’ts of Repaying Revenue-Based Funding

When it comes to repaying revenue-based funding, there are certain things that you should avoid doing in order to ensure timely and successful repayments. In this section, we will discuss the “Don’ts” of repaying revenue-based funding.

1. Don’t ignore your payment schedule: One of the most important things to keep in mind when repaying revenue-based funding is to stick to your payment schedule. This schedule outlines the amount and frequency of payments that you have agreed upon with your lender. Ignoring this schedule can result in missed or late payments, which can lead to penalties and damage your relationship with the lender.

2. Don’t borrow more than you need: While it may be tempting to take out a larger loan than what you actually need, it’s important not to fall into this trap. Remember that every dollar borrowed needs to be paid back with interest. Borrowing more than necessary can put unnecessary strain on your business and make it harder for you to meet your repayment obligations.

3. Don’t underestimate your expenses: When calculating how much money you need from a revenue-based funding source, it’s crucial not to underestimate your expenses. Make sure you have a clear understanding of all the costs associated with running your business and factor them into your loan request accordingly. Underestimating expenses can lead to a shortfall in funds and make it challenging for you to meet repayment obligations.

4. Don’t neglect communication: Good communication is key when repaying revenue-based funding. It’s essential that you keep an open line of communication with your lender throughout the repayment process, especially if any unexpected issues arise that may affect your ability to make payments on time. Neglecting communication can damage trust and potentially result in penalties or even defaulting on the loan.

5. Don’t use funds for personal expenses: Revenue-based funding is meant for business purposes only, so it’s crucial not to use these funds for personal expenses. Mixing personal and business finances can make it difficult to track your income and expenses accurately, which can lead to financial mismanagement and delays in repayment.

Avoiding these “Don’ts” of repaying revenue-based funding is crucial for ensuring a smooth and timely repayment process. It’s essential to stick to your payment schedule, borrow wisely, communicate effectively with your lender, and use the funds solely for business purposes. By following these guidelines, you can successfully repay your revenue-based funding and maintain a positive relationship with your lender.


Repaying revenue-based funding in a timely manner requires careful planning and adherence to certain dos and don’ts. By following the tips outlined in this article, businesses can not only ensure timely repayments but also maintain a healthy relationship with their funding partners.

Firstly, it is important for businesses to thoroughly understand the terms and conditions of their revenue-based funding agreement before signing on the dotted line. This includes understanding the repayment structure, interest rates, and any potential penalties for late payments. It is also important to have a solid plan in place for how the funds will be used and how they will generate revenue to ensure timely repayments.

Secondly, businesses should carefully assess their current financial situation before taking on revenue-based funding. This means realistically evaluating their cash flow projections and ensuring that they have enough incoming revenue to meet the repayment schedule without putting undue strain on their finances. Taking on too much funding or overestimating future revenues can lead to missed payments and ultimately damage the business’s creditworthiness.

Another key factor in timely repayment is effective budgeting and financial management. Businesses should make sure to allocate a portion of their revenue specifically towards loan repayments each month. This will help them stay on track with their payment schedule and avoid falling behind due to unexpected expenses or fluctuations in cash flow.

Additionally, communication with funding partners is crucial when it comes to timely repayments. If unexpected circumstances arise that may affect payment deadlines, it is important for businesses to proactively reach out and discuss potential solutions with their funder rather than simply missing a payment without explanation. Building open lines of communication and maintaining transparency can help foster a positive relationship with funders.

Avoiding certain common pitfalls such as borrowing against future revenues or using funds for non-business related expenses can greatly increase the chances of making timely repayments. These actions not only jeopardise the health of the business but also put strain on relationships with funding partners.

Timely repayment of revenue-based funding requires careful planning, effective financial management, and open communication with funders. By following these dos and don’ts, businesses can ensure timely repayments and strengthen their financial standing for future growth opportunities. Remember, a successful partnership with funding partners is built on trust and mutual benefit. So make sure to prioritise timely repayments to maintain a strong relationship with your funder.