Revenue-based finance vs merchant cash advance
Revenue-based finance and a merchant cash advance both repay as a share of sales, but underwrite different revenue. Revenue-based finance reads online store and marketplace data and suits ecommerce, priced as a flat fee. A merchant cash advance reads card-machine takings and suits in-person retail and hospitality, priced as a factor rate. Match it to where your sales actually land.
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 and is repaid as a fixed percentage of daily sales until a single flat fee is cleared. The lender underwrites on live Shopify, Amazon, Stripe and similar data rather than filed accounts, so a young store with strong sales can qualify. A £100,000 advance at a 6 percent fee repays £106,000 in total, with no interest rate and no fixed term, the repayment flexing with sales.
How a merchant cash advance works
A merchant cash advance gives a lump sum, usually a multiple of monthly card-machine takings, repaid as a fixed share of daily card receipts. The cost is quoted as a factor rate, so a £30,000 advance at a factor of 1.3 repays £39,000 in total. Like RBF, repayment tracks takings rather than a fixed monthly instalment, but the underwriting reads the physical card terminal, which is why it suits retail, hospitality and other in-person card-taking trade.
Side by side
| Feature | Revenue-based finance | Merchant cash advance |
|---|---|---|
| Underwritten against | Online store and marketplace sales | Card-machine takings |
| Best for | Ecommerce and online sellers | In-person retail and hospitality |
| Pricing | Flat fee, typically 2% to 8% | Factor rate, typically 1.1 to 1.5 |
| Repayment | Share of daily online sales | Share of daily card takings |
| Data connected | Shopify, Amazon, Stripe feeds | Card terminal statements |
| Term | Variable, no fixed end date | Variable, no fixed end date |
Figures are typical illustrative ranges, not quotes. Your terms depend on revenue stability, sector and lender.
When revenue-based finance wins
RBF is the better fit when your sales run through an online store or marketplace rather than a physical till. It reads the platforms that reflect your real trading, so a Shopify or Amazon brand whose filed accounts understate current sales can still raise a sensible advance. It also suits funding inventory ahead of a peak, where repaying as a share of online sales keeps cost aligned to performance. For the full ecommerce picture see ecommerce funding.
When a merchant cash advance wins
An MCA is the better fit when most of your revenue comes through a card terminal in a shop, cafe, salon or restaurant. The card-takings history carries the underwriting, which makes it accessible even where a term lender would hesitate, and the repayment flexes with footfall. For a business with both online and in-person sales, the deciding question is simply which channel carries the bulk of the revenue, because that is the one the advance can be sized against.
Frequently asked questions
What is the difference between RBF and an MCA?
They share a repayment model, a share of takings, but underwrite different revenue. Revenue-based finance sizes against online store and marketplace sales such as Shopify, Amazon and Stripe, and is priced as a flat fee. A merchant cash advance sizes against card-machine takings from a physical terminal, and is priced as a factor rate. RBF fits ecommerce; an MCA fits in-person card trade.
Which one suits an online shop?
Revenue-based finance, in most cases. It reads live store and payment data rather than card-terminal history, so an online seller with strong Shopify or Amazon revenue and little or no physical card flow is underwritten on the numbers that actually reflect the business. An MCA would struggle to size the advance because there is no meaningful card-terminal stream to read.
Is a flat fee better than a factor rate?
Neither is automatically better, they are just two ways of quoting the same kind of cost. A flat fee on RBF and a factor rate on an MCA both express a fixed total cost rather than an interest rate. What matters is the effective annualised cost over how quickly your sales repay it. A small headline fee can annualise high if the advance clears in weeks, so convert both to a like-for-like figure before deciding.
Can FundBiz arrange both?
Yes. FundBiz routes merchant cash advances and revenue-based finance to specialist lenders on its panel. For RBF the panel includes ecommerce-focused providers; for an MCA it includes card-advance providers. Tell us your revenue shape and we match the product that fits, for limited companies, LLPs and partnerships of four or more.
Check what you qualify for
Tell us where your sales land, online or in person, and we will match you to the revenue-based or card-advance lenders that fit.
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.