Line of Credit vs. Revenue-Based Financing: Compare Business Funding
Business line of credit vs. RBF — revolving working capital vs. revenue-tied growth capital for digital businesses.
Business Line of Credit: A revolving business line of credit lets you draw funds as needed up to a set limit and only pay interest on what you use. Revenue-Based Financing: Revenue-based financing provides capital in exchange for a fixed percentage of future monthly revenue until a set repayment cap is reached.
Business Line of Credit vs. Revenue-Based Financing — side by side
| Business Line of Credit | Revenue-Based Financing | |
|---|---|---|
| Typical amount | $10,000 – $500,000 | $25,000 – $1,000,000 |
| Typical term | Revolving (12 – 24 month draw period) | 6 – 36 months |
| Rate | 8% – 36% APR | 6% – 12% of monthly revenue |
| Minimum time in business | 6 months | 6 months |
| Minimum credit score | 580+ | 550+ |
Which is right for your business?
- Business Line of Credit tends to fit best when you need ongoing cash flow or seasonal inventory.
- Revenue-Based Financing tends to fit best when you need saas growth or e-commerce inventory.
Frequently asked questions
Which is cheaper — a credit line or RBF?
For businesses that need revolving, intermittent capital, a credit line is cheaper because you only pay interest on outstanding balances. RBF carries a total repayment cap of 1.2–1.5x regardless of how quickly you repay, making it more expensive for conservative draws. For larger lump-sum growth investments, RBF may be the only accessible option.
