Applying for funding can feel stressful, but it doesn’t have to be. One option growing in popularity is revenue-based financing, a flexible model where repayment adjusts with your earnings. Unlike traditional loans, you don’t pay a fixed amount every month. Instead, payments scale with your revenue—helping you manage cash flow more easily.
But here’s the catch: just because revenue-based financing is flexible doesn’t mean approval is automatic. You’ll still need to prepare carefully. By getting your business in order before applying, you’ll increase your chances of fast approval and better terms. Sometimes, the preparation you do can even qualify you for same day business funding, which is a game changer if you need money urgently.
In this blog, we’ll walk step-by-step through how to prepare for a revenue-based financing application. Along the way, we’ll highlight important tools like a Merchant Cash Advance Calculator, explore alternatives like unsecured small business loans, and explain why a small business merchant cash advance or even a merchant cash advance for startups might also be worth considering.
Understand What Revenue-Based Financing Really Means
Revenue-based financing (RBF) is different from traditional funding. Instead of fixed repayments, you agree to share a percentage of your revenue until the investment is repaid with a pre-agreed return. For example, if you borrow $50,000 and agree to repay 1.5x the amount, you’ll eventually pay back $75,000, but your payments depend on your monthly sales.
This means in slower months, you pay less, and in stronger months, you pay more. That flexibility is why many entrepreneurs choose RBF over bank loans. It’s a great alternative if you don’t want the pressure of fixed payments.
If you’re still weighing options, you might want to compare how different funding works. For instance, this guide on secured vs. unsecured loans explains the pros and cons clearly. That way, you can decide if unsecured loans or revenue-based financing is the better fit.
Review Your Revenue Streams
Lenders providing revenue-based financing want to see stable and predictable revenue. If your revenue is highly seasonal or inconsistent, approval may be more challenging.
Start by reviewing where your income comes from:
- Are most of your sales cash, card, or online transactions?
- Do you have long-term contracts that provide stability?
- How much of your revenue is recurring (subscriptions, service retainers, etc.)?
Once you identify your strengths and weak spots, you can take steps to stabilize revenue. That might mean focusing more on recurring customers or diversifying your client base. Doing this ahead of time makes your application stronger and builds lender confidence.
And if you’re currently struggling with revenue dips during slow months, a small business merchant cash advance may help bridge the gap until you qualify for a revenue-based financing plan.
Organize Financial Documentation
Even though revenue-based financing is more flexible, providers still want to see your financials. Having clean, up-to-date records makes the process smoother. Commonly requested documents include:
- Bank statements (last 3–6 months)
- Profit and loss statements
- Tax returns
- Sales reports
- Accounts receivable details
Think of this step as laying the groundwork. Just like when applying for equipment financing, being prepared with the right documents saves time and reduces back-and-forth with lenders.
Check Your Cash Flow Position
Cash flow is everything when it comes to financing. RBF providers will look closely at how much cash is moving in and out of your business. Strong, steady cash flow signals that you can handle repayments.
A great way to prepare is by conducting a simple cash flow analysis. List your monthly income and expenses side by side. This gives you a clear picture of whether your revenue can comfortably cover both operating expenses and financing payments.
If you discover gaps, you might want to test repayment scenarios using a Merchant Cash Advance Calculator. These tools help you visualize how much you’ll pay in different months, so you won’t be caught off guard.
Strengthen Your Creditworthiness
Unlike bank loans, credit scores are less important for revenue-based financing, but they still matter. Providers want to see that you’re financially responsible. A better credit profile can sometimes lead to lower fees or faster approvals.
Simple steps to improve your profile include:
- Paying bills on time
- Reducing outstanding debts
- Monitoring your credit reports for errors
While preparing for RBF, you can also explore other financing options like unsecured small business loans, which rely less on collateral. Strengthening your overall financial health keeps all doors open.
Evaluate Alternative Funding Options
Revenue-based financing is powerful, but it’s not the only option. Before applying, compare other solutions to ensure you’re choosing the right path.
Here’s a comparison table to help you weigh options:
Funding Option | Repayment Style | Best For |
Revenue-Based Financing | % of monthly revenue | Companies with steady sales growth |
Small Business Merchant Cash Advance | Daily/weekly % of sales | Short-term working capital needs |
Unsecured Small Business Loans | Fixed monthly installments | Businesses needing predictable costs |
Merchant Cash Advance for Startups | Flexible with sales | New ventures without long credit history |
For urgent needs, same-day merchant cash advances might be the quickest solution, giving you fast access to working capital.
Minimize Liabilities Before Applying
One overlooked part of preparing for financing is reducing liabilities. The fewer obligations you have, the stronger your profile looks. This doesn’t mean you need to be debt-free, but you should show lenders that you’re not overextended.
Simple actions include:
- Paying off smaller debts
- Negotiating better repayment terms with current creditors
- Consolidating existing loans
Taking these steps not only strengthens your application but also improves your ability to handle flexible repayment models like RBF or even merchant cash advance for startups.
Build a Business Growth Plan
Providers want to know that their money will help you grow—not just cover bills. Creating a clear growth plan demonstrates that you’re serious and strategic.
Your growth plan should outline:
- How you’ll use the funds (marketing, hiring, equipment, expansion)
- Projected revenue increases
- Timeline for repayment
Think of it this way: lenders aren’t just investing in your current revenue, but also in your potential. By showing that you’ve mapped out the future, you build trust and credibility.
If you’re unsure how to structure this, check out this guide on legal aspects of merchant cash advances to understand how financing partners view risk and compliance.
Prepare for Fast Approval
Finally, be ready for a quick process. Some RBF providers move faster than banks, and in some cases, you might even secure same day business funding if your documents and revenue data are ready.
To prepare for this, keep digital copies of your financial records organized and accessible. Respond quickly to requests from providers, and double-check your application for accuracy before submitting.
The more organized you are, the faster your approval process will be—and the sooner you’ll have access to funds for growth.
Putting It All Together
Preparing for a revenue-based financing application doesn’t have to feel overwhelming. It’s all about getting your financial house in order, understanding your revenue streams, minimizing liabilities, and showing lenders that you’re ready to grow.
And remember, financing isn’t one-size-fits-all. Alongside revenue-based financing, you can consider a small business merchant cash advance, an unsecured small business loan, or even merchant cash advance for startups. Use tools like a Merchant Cash Advance Calculator to compare your repayment scenarios before committing.
By taking the time to prepare, you’ll position your business for approval, better terms, and smarter use of capital.
FAQs
Q1: What do lenders look for in a revenue-based financing application?
They mainly review your revenue stability, financial documentation, and growth potential. Strong cash flow is key.
Q2: Can I qualify if my credit isn’t perfect?
Yes. Credit is less critical than revenue history in RBF. That said, improving your credit can still help.
Q3: Is revenue-based financing better than a merchant cash advance?
It depends. RBF is usually better for businesses with steady revenue growth. Merchant cash advances may suit urgent, short-term needs.
Q4: How fast can I get funds?
If your documents are in order, some providers offer same day business funding.
Q5: What’s the role of a Merchant Cash Advance Calculator?
It helps you forecast repayment costs under different revenue scenarios, making it easier to choose the right funding option.
Final Thought: Preparing for revenue-based financing is about more than paperwork. It’s about showing you’re financially strong, growth-focused, and ready to handle flexible repayments. With the right preparation—and the right funding partner—you’ll set yourself up for success.
