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When does revenue-based funding make sense? 6 moments worth knowing
When does revenue-based funding make sense? 6 moments worth knowing
Rather than a traditional loan from a bank or equity investment, revenue-based finance (RBF) works by trading a share of a business’s revenue for a cash lump sum.
A funder, like Liberis, provides capital upfront and the customer pays an agreed percentage of their sales until the arranged amount is paid.
The clever part is that payments fluctuate with a business’ sales. If sales are strong, you’ll pay back more and during quieter months, you’ll pay back less.
But primarily, RBF is a fast and simple funding solution. And so, businesses tend to opt for it when they are – to put it frankly – in a bit of a bind.
And research shows this. According to the Federal Reserve 2026 Report on Employer Firms, the most common reason businesses in the US took out funding was to meet operating expenses (56%).[1]
This could be anything from covering an unexpectedly high tax bill, repairing an essential piece of equipment or paying for a larger than predicted invoice.
At Liberis, the average time to fund our merchants is 1.7 days – with one receiving their funding in less than time than your morning coffee queue – an impressive 12 minutes. [2]
Funding for the future
But there’s another reason SMEs opt for RBF that isn’t just to get finance quicker than a flat white – it’s to fund business growth.
In 2025, 67% of Liberis US and UK customers used funding to purchase stock, followed by new machinery and equipment, and marketing investments at 21% and 17%, respectively.
And of those surveyed, almost 80% reported moderate to significant increases in revenue after taking out funding.
The upshot is that funding doesn’t have to be used to cover a shortfall or bridge a gap between pay days – even though it’s perfectly designed for those moments.
So, to inspire you to think about different ways you could use RBF long-term, we’ve designed 6 scenarios where it could benefit your business.
Scenario 1: An unexpected growth opportunity
SME owners know that opportunities can go as quickly as they come up – so being able to move at pace when they do is essential for business growth.
Picture this: a competitor is shutting up shop and selling their stock at a great price, but you don’t have the cash reserves to take advantage.
With RBF that doesn’t have to be a missed opportunity.
Because funding can be approved in a matter of days, your business could be in a great position to secure the stock.
Scenario 2: You’re ready to grow your team
It’s probably a fair to say small business owners are ‘Jack of all trades’.
Usually, they’re the accountant, operations lead and receptionist for the businesses – essentially, they do it all.
But in reality – they can’t always.
If your business wins a big contract or you’re turning customers away because you can’t keep up with demand, hiring more staff can be essential.
The challenge is that new employees need paying from day one, often before the extra work they’re helping you deliver starts bringing in revenue.
But a financial injection can help with this growth stage of your business.
It gives you the confidence to accept new work and meet customer demand.
Scenario 3: Entering new markets
Just because a business is small doesn’t mean their ambitions are.
But challenging macro- and microeconomic conditions can make it harder for businesses to fund the next stage of their growth.
13% of Liberis-funded merchants in 2025 said entering new markets was one of their primary challenges in 2025.
Take a furniture manufacturer that currently supplies restaurants, for example.
It might see an opportunity to start selling directly to homeowners, but entering the consumer market could require significant upfront investment.
That’s where revenue-based finance can help.
By providing the upfront capital needed to cover those initial costs, RBF can give businesses the means to enter new markets sooner, without having to wait until they’ve built up the cash themselves.
Scenario 4: Updating your tech
The last Q4 was your most successful yet. Revenue was through the roof and you’ve managed to top up your cash reserves.
But you’ve had feedback from customers that your digital ecosystem, whether that was your checkout process or card machines, were slow and hampered the buying experience.
You decide it’s time to update your tech stack. But despite your record sales, the investment is a big upfront investment.
A cash injection can allow you to reinvest in your business to fix a genuine problem that has been expressed by your customers.
Improving the experience can then drive more sales in the long term.
Scenario 5: Make your marketing count
Marketing is essential to cut through the competition. But it doesn’t always come cheap – particularly during busy points throughout the year.
In the run up to Black Friday, for example, retail media soared due to increased demand for ad space – findings show retail media ad spending nearly doubled YoY in 2024.
Those businesses that don’t have the capital to invest during critical selling moments throughout the year risk being lost among the competition.
17% of Liberis customers already use RBF to fund their marketing efforts, so why not see how your business could benefit?
Top tip: TikTok is becoming one of the most popular avenues for businesses to advertise their products.
An Oxford Economics report found that 88% of small businesses reported increased sales following marketing through the platform.
Scenario 6: Turn a slow month into a growth month
Most businesses – no matter the industry – have a slow season and a peak season.
Usually, a lot of focus is on how to maximise performance during the busy period. However, a quieter month doesn’t mean business owners have to slow down.
During this time, owners have more time to think about investments for when the busy period comes back around again.
If a cash injection is needed to make this possible, RBF can be a great solution.
Because payments are made as a percentage of your sales, instead of a fixed rate, if sales are slower, you’ll pay less. [3]
Funding for your future
Every business is different and the right time to seek funding heavily depends on your goals, circumstances and the opportunities on offer.
RBF can do far more for your business than solve a problem today.
It gives business owners the freedom to act when opportunities appear, invest in growth and, ultimately, the flexibility to make confident business decisions.
And more than 90% of Liberis customers said that funding has a positive impact on their operations
At Liberis, we’ve spent the last 20 years helping thousands of small businesses turn those decisions into action.
So, you don’t have to wait for cash to catch up with your ambitions.
See how much funding you’re eligible for with Liberis today.
Disclaimers
The information contained in this article is provided for general information purposes only and is not intended to constitute advice. Although Liberis has endeavoured to ensure the content of this article accurate, you should seek appropriate professional advice before taking any action in reliance on any of the information contained within it.
This product is provided by Liberis Limited, Scale Space Building, 58 Wood Lane London, W12 7RZ (company number: 05654231). This product is a form of receivables finance not a loan. Liberis is not authorised by the Financial Conduct Authority, so complaints about this product are not covered by the Financial Ombudsman Service.
[1] Findings based on 2025 Small Business Credit Survey with results recorded from previous 12 months.
[2] Globally, 70% of merchants were funded within 1 working day from approval in 2025. Regional performance may vary.
[3] You will be expected to operate your business so that Liberis receives a monthly minimum amount of up to 3% of the receivables purchased. Liberis may collect the shortfall by direct debit without further notice.
