July 2026 | AltFunds Global
By Taimour Zaman, Founder, AltFunds Global Corp. (Toronto) and AltFunds Global AFG AG (Zurich)
The short version
A revenue based business loan repays as a share of what the business earns each month, rather than a fixed installment set in advance. Strong month, more is repaid. Slow month, less. The capital is priced against the performance of the business, not against a personal home or a rigid amortization table.
It is non-dilutive. You keep the equity and you keep control.
It is also more expensive than senior bank debt, and there is a specific test that decides whether it helps you or quietly strangles you. Most people never run that test. This piece is mostly about that test.
Why do people ask us about this
Because they are staring at two bad options and hoping there is a third.
Option one is selling equity to fund growth, which means paying for this year's expansion with a permanent slice of every year that follows. Option two is a fixed-payment loan the business has to service in January as reliably as in November, which is fine until a quarter comes in soft.
The operator asking about revenue based capital is usually somewhere specific: revenue is real and growing, the numbers are good, and the gap between what they have been offered and what the plan actually needs is the whole conversation. Already approved for part of it. The rest has to come from somewhere, and the pricing on that gap piece has to make sense.
How the structure actually works
A provider advances a sum. Repayment is set as an agreed percentage of monthly revenue, collected until a fixed total has been returned. That total is the advance plus a set cost, expressed as a fixed dollar amount rather than a moving interest rate.
Here are the numbers, rather than the brochure version.
The repayment share. Commonly somewhere between three and ten percent of gross monthly revenue, collected monthly, though some structures collect weekly or daily. The percentage is set at close and does not move. What moves is the dollar amount, because revenue moves.
The cost. Expressed as a multiple of the advance rather than an APR. Typically in the range of 1.15x to 1.5x. On a $500,000 advance at 1.3x, you return $650,000 in total. There is no separate interest calculation. That fixed number is the number.
Why the multiple matters more than it looks. Because the repayment total is fixed but the timeline is not, retiring it early does not save you money. It costs you the same $650,000 whether that takes eighteen months or thirty. Accelerated growth means you return the same total over a shorter window, which raises the effective annualized cost. This is the opposite of how a term loan behaves and it surprises people.
Tenor. Generally six to thirty-six months of collections, depending on the multiple and the repayment share.
What is underwritten. The revenue, not the founder. Providers want to see recurring or contracted income with enough history to prove durability. Bank statements, processor data, subscription reporting, or accounting-system access are usually connected directly. The underwrite is largely about whether the revenue is real, repeating, and diversified.
Security. Often a general security agreement or UCC filing over the business, and frequently a performance guarantee from the principals. Read this carefully. Non-dilutive does not automatically mean non-recourse, and those two words get blurred in sales conversations.
The carry test, which is the whole thing
Before rate, before provider, before anything: can the business fund both the repayment share and the growth the capital is supposed to buy?
Run it properly. Take the repayment share off the top of gross monthly revenue in your worst recent month, not your best. Not average. Worst. Then look at what is left against payroll, suppliers, and the operating cost of the expansion the money is funding.
If the remainder is thin in a soft month, the structure is working against the business. You have bought growth capital that is quietly consuming the working capital the growth requires. This is the failure mode, and it does not announce itself for two or three quarters.
The test protects you from something specific: the flexibility of revenue based capital is real, but it is flexibility in timing, not in total. A slow month lowers this month's payment. It does not lower what you owe. It stretches the tail.
When it fits
Recurring or contracted revenue. Subscription income, retainers, repeat contracts, a book of business that renews. The provider is underwriting the revenue, so the revenue has to be there and it has to be verifiable.
Seasonal or uneven businesses. This is where the structure genuinely earns its cost. A fixed-amortization loan asks for the same payment in a dead quarter as in a peak one. A revenue based structure breathes with the top line. If your revenue is real but lumpy, this is the argument for paying more.
Founders protecting equity. If the honest alternative is selling a stake to fund expansion, the comparison is not against the bank rate. It is against the permanent cost of the equity. That changes the arithmetic considerably, and it is the reason serious operators pay the multiple without complaint.
Growth that converts to revenue inside the window. Inventory, marketing, a hire that pays for itself. Capital that turns into revenue inside the repayment window services itself. Capital that funds something with an eighteen-month payback fights the structure the whole way.
When it does not fit
Pre-revenue. There is nothing to underwrite and nothing to repay from. A company at that stage needs a different structure and needs to be honest with itself about which one.
Thin margins. If the business runs at fifteen percent net and the repayment share is eight percent of gross, the arithmetic is already telling you the answer.
Filling an operating hole. Revenue based capital funds growth that generates revenue. It is a poor tool for covering a structural loss, because the repayment mechanism takes its share whether the underlying problem got fixed or not.
Long-payback capital projects. A building, a plant, a multi-year asset. The repayment window and the return window do not line up. That is senior debt territory.
What it costs, plainly
More than senior bank debt. That is the trade for flexibility and for keeping the equity intact, and it should be evaluated as a trade rather than as a rate.
On fees, our position is precise, because this market is full of vague fee language and a serious operator should read every claim closely. Third-party costs in a transaction, due diligence and similar, are paid to those third parties, not to us. AltFunds Global is compensated per the agreed structure of the engagement, generally when the capital provider funds.
The file a provider reads
Providers read a file, not a pitch. For a revenue based request the core of it is proof of the revenue: twelve months or more of bank statements, financial statements, a clear picture of recurring versus one-time income, customer concentration, and churn if the model is subscription based.
Concentration is the item most operators underestimate. Revenue of $4 million looks strong until a provider sees that sixty percent of it comes from two customers. Then they are not underwriting your revenue, they are underwriting two counterparties they have never met, and the terms move accordingly.
The cleaner and more verifiable the record, the better the terms, because the provider is pricing the risk it can see. A file that makes the revenue easy to verify gets read seriously. A file that obscures the numbers gets priced for the uncertainty.
Timelines on structured transactions of this kind run 20 to 120 banking days depending on the structure, the jurisdiction, and how complete the file is on arrival.
Where we fit
We are a global financial advisory firm operating from Toronto, Canada and Zurich, Switzerland. We are not a lender and not a fund. We know the map, we qualify the file, and we connect the right capital to the right deal, on transactions from $1 million to $500 million.
On a revenue based request that means running the carry test with you before anyone spends money, and telling you plainly if the answer is no. It means building the file so a provider can underwrite the revenue without a second round of questions. And it means placing it with a desk whose mandate fits the revenue model, because a subscription business and a seasonal distributor are not the same risk and should not be sent to the same counterparty.
Verification, not application.
Taimour Zaman is the Founder and Chief Capital Strategist of AltFunds Global. He is the author of Structured Finance Demystified and has been featured in TechTimes, Investment Executive, UK Entrepreneur, and Private Banker International.