Revenue-based finance (RBF) came out of the e-commerce and software world, and it’s now offered to New Zealand online sellers through platforms and specialist funders. Instead of fixed monthly repayments, you hand over an agreed percentage of sales until you’ve repaid a fixed total. When sales are strong, you repay faster; when they’re slow, you repay less.
How does revenue-based finance work?
- Connect your data. The funder links to your sales platform, payment processor or bank account to see revenue history.
- Get an offer. Based on recent revenue, it offers an advance and sets two numbers: the total repayment (advance plus a fixed fee) and the share of revenue it will take.
- Receive the funds.
- Repay automatically. A slice of each day’s or week’s sales goes to the funder until the total repayment is reached.
Who is it designed for?
- E-commerce businesses with steady online sales history.
- Subscription businesses with predictable recurring revenue.
- Businesses that need to fund inventory or marketing where the spend turns into sales fairly quickly.
It’s generally less suited to project-based, B2B-invoice or cash-heavy businesses, because funders need clean, trackable revenue data.
The appeal
- Repayments flex with trading. A quiet month doesn’t bring a fixed repayment you can’t meet.
- Speed. Data connections make assessment fast.
- No property security. Assessment is based on revenue.
- No equity. You keep all your shares.
The catches
- Hard-to-compare cost. Because the fee is fixed but the timing isn’t, the effective cost depends on how fast you repay. Repaying quickly after a strong season makes a fixed fee comparatively expensive over that short period. Always ask for the total repayment in dollars and model it against realistic sales.
- Cash flow drag. Taking a share of every sale reduces the cash available for the next stock order. Make sure margins can carry it.
- Platform dependence. If funding is tied to one sales platform, changing platforms may be complicated.
- Stacking. Combining RBF with pay-later plans and card debt can crowd your cash flow quickly.
A simple way to test an offer
Take your realistic monthly sales for the next year, apply the revenue share and work out:
- how many months until the total repayment is reached;
- how much cash is left each month after the revenue share, stock, GST and overheads;
- whether a slow quarter would still leave enough to trade.
If the answer to the last question is “barely”, the offer is too big.
Revenue-based finance vs other options
| Revenue-based finance | Unsecured term loan | Line of credit | |
|---|---|---|---|
| Repayments | Share of sales | Fixed | Flexible, on what’s drawn |
| Assessment | Sales data | Bank statements | Bank statements |
| Best for | Online/subscription sellers | One-off, known costs | Recurring, uneven needs |
| Cost clarity | Lower | Higher | Higher |
| Works for B2B invoicing | Rarely | Yes | Yes |
The New Zealand angle
Many New Zealand online sellers run seasonally, with big peaks before Christmas and in the lead-up to winter for some categories. RBF’s flexible repayments can fit that rhythm, but a fixed-term unsecured loan or line of credit with clear costs may be easier to plan around. Also remember GST: a share of gross sales may include GST you owe Inland Revenue, so budget for it separately.
Questions to ask a revenue-based funder
- What is the total repayment amount in dollars, and is it fixed regardless of how quickly I repay?
- What share of which revenue is taken: gross sales, card sales only, or platform payouts?
- Is there a minimum monthly repayment, or a maximum repayment period?
- What happens if I change sales platforms, payment processors or bank accounts?
- Can I repay early, and if so, is any of the fee refunded?
- Is any security taken, and is a personal guarantee required?
- What counts as default?
Is it right for your business?
Revenue-based finance tends to work best when three things are true: revenue is trackable through a platform or processor, margins are healthy enough to give up a slice of every sale, and the funds are going into something that quickly produces more sales, such as inventory for a proven product or marketing with a known return. If any of those is shaky, a conventional loan or line of credit with clear costs is usually the safer choice.
Where we fit
We don’t offer revenue-based finance. We arrange unsecured business loans and lines of credit for businesses usually trading 6+ months, sized on turnover and bank statements, and property-secured loans from $20,000 to $1m. For many online sellers, a line of credit does a similar job with simpler pricing, and we’ll talk it through honestly.