MCA
How Revenue-Based Financing Actually Works
Repayment as a share of sales rather than a fixed installment. Mechanics, pricing, and the businesses it suits.
March 18, 2026 · 7 min read
The core mechanic
A funder provides capital today in exchange for an agreed multiple of that capital, collected as a percentage of gross revenue until delivered. Strong months repay faster; weak months repay slower. There is no fixed maturity date.
For businesses with variable revenue, this alignment is the entire point — the obligation breathes with the business.
How it is priced and underwritten
Pricing is expressed as a multiple, typically 1.15 to 1.45, with the collection percentage set so the expected term lands in the intended window. Underwriting reads deposit consistency, deposit count, average balance, negative days, and existing debits.
Trailing revenue matters more than projections, and stability matters more than growth.
Good fits and poor fits
Good: recurring or high-frequency revenue, e-commerce, restaurants, services, subscription software, seasonal operators. Poor: pre-revenue businesses, project-based firms with 90-day payment cycles and no interim collections, and anyone using it to cover a structural loss.
Used for a defined return, it is efficient capital. Used to paper over margin, it accelerates the underlying problem.