Revenue-based finance vs business term loan
Revenue-based finance repays as a flexible share of sales and underwrites on live store data, so it suits online businesses and seasonal trade. A business term loan gives fixed monthly instalments at a known cost over a set period, better for one-off needs and budgeting certainty. RBF wins on flexibility and early-stage access; a term loan wins on absolute cost over a longer hold.
Founder & Managing Director, Muswell Rose, FundBiz
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind FundBiz. His background runs through commercial finance, mortgages and fintech, including as managing director of an invoice finance business. He oversees FundBiz's specialty finance comparison and the logic behind how businesses are matched to lenders.
Last reviewed: 29 June 2026
How revenue-based finance works
Revenue-based finance advances a lump sum to an online business, repaid as a fixed percentage of daily sales until a single flat fee is cleared. There is no interest rate and no fixed term: the repayment flexes with sales, so strong weeks clear it faster and quiet weeks slower. The lender underwrites on live Shopify, Amazon and Stripe data rather than filed accounts, which is why a fast-growing store with thin accounts can still qualify. A £100,000 advance at a 6 percent fee repays £106,000 in total.
How a business term loan works
A business term loan is a fixed amount lent on day one and repaid in equal monthly instalments over a set period, typically one to six years, with interest charged on the outstanding balance. The payment is the same every month regardless of trade, which gives certainty for budgeting but no relief in a slow period. It suits one-off needs with a defined use of proceeds and a business with the trading history to support the underwriting.
Side by side
| Feature | Revenue-based finance | Business term loan |
|---|---|---|
| Pricing | Flat fee, typically 2% to 8% | Interest rate over the term |
| Repayment | Share of daily sales, flexes | Fixed monthly instalment |
| Term | Variable, no fixed end date | Set, often 1 to 6 years |
| Underwriting lean | Live store and payment data | Credit standing and accounts |
| Best for | Online sellers, seasonal trade | One-off needs, budgeting certainty |
| Where to apply | FundBiz panel | Mainstream bank or lender |
Figures are typical illustrative ranges, not quotes. Your terms depend on revenue, trading history and lender.
When revenue-based finance wins
RBF is the better fit when your sales run online and vary through the year, because repaying as a share of sales keeps cost aligned to performance and eases the pressure in quiet months. It is also the route when filed accounts understate current trading, since it reads live data instead. And it suits funding stock or marketing ahead of a peak, where the upside should repay the advance quickly. Run the numbers first: convert the flat fee to an effective annual cost so the comparison with a term loan is like for like.
When a business term loan wins
A term loan is the better fit for a one-off need held over a year or more, where a known interest rate and a fixed schedule usually beat a flat fee on absolute cost and make budgeting simple. It suits established businesses with the trading history to support credit-led underwriting, and needs that are not tied to a sales cycle, such as a fit-out, an acquisition deposit or general working capital.
Frequently asked questions
Which is cheaper, RBF or a term loan?
For a one-off need held over a year or more, a business term loan usually wins on absolute cost because interest on a clear repayment schedule tends to undercut a flat fee once the fee is annualised. Revenue-based finance can be competitive for short, sales-linked needs and is easier to read up front, but if sales repay the advance quickly the flat fee annualises high. Convert the RBF fee to an effective annual cost before comparing.
Which is easier to qualify for?
Revenue-based finance is often easier for a young online business, because it underwrites on live store and payment data rather than filed accounts, so strong recent sales can carry an application that thin accounts would sink. A term loan leans more on trading history, credit standing and affordability, so it tends to favour established businesses with a clear track record.
Do repayments flex with sales on both?
Only on revenue-based finance. RBF takes a fixed share of daily sales, so quiet weeks cost less and busy weeks clear it faster, with no fixed instalment. A term loan has a set monthly payment that does not move with trade, which gives certainty for budgeting but no relief in a slow month. That difference is often the deciding factor for a seasonal business.
Can I use RBF for equipment or property?
It is rarely the right tool for either. RBF is short-term working capital sized against sales, best for stock, marketing and growth spend. For equipment, asset finance is usually cheaper and better matched to the asset life, and for property a commercial mortgage or bridging fits. A term loan sits between the two as general-purpose borrowing for a defined one-off need.
Check what you qualify for
Tell us your revenue shape and what the money is for, and we will match you to the product and lenders that fit, before any hard search.
Open the eligibility checker →Limited companies, LLPs and partnerships of 4+ only.
This is general information, not financial advice. FundBiz works with limited companies, LLPs and partnerships of four or more. Last reviewed: 29 June 2026.