Quick answer
Merchant cash advance and revenue-based providers give a business a lump sum in exchange for a share of future card takings or revenue until a fixed total is repaid. Repayments rise and fall with sales. They suit businesses with steady card or online sales and no property security, and are usually priced as a fixed amount rather than an interest rate, which makes the total dollar cost the key comparison.
Key points
- Repaid as a percentage of daily card or online sales until a fixed total is reached.
- Assessed on sales history from your terminal, merchant or platform statements.
- Usually unsecured; often a director guarantee.
- Compare the fixed total repayable in dollars and how long it's likely to take.
- Repayment
- Share of takings
- Suits
- Card-heavy businesses
- Strength
- Flexes with sales
- Weakness
- Costly if used long term
Most lending products ask for the same repayment whether you had a cracking week or a quiet one. Revenue-based providers flip that. They take a slice of what comes through your card terminal or online store, so the repayment shrinks when trade is slow. That’s appealing for hospitality, retail and online sellers — but the convenience has a price, and the structure needs to be understood before you sign.
How does a merchant cash advance work?
- The provider reviews your card, merchant-facility or platform sales history.
- It offers a lump sum and states a fixed total repayment amount.
- It sets a percentage of daily sales (sometimes called a holdback) that will be collected.
- Collections happen automatically, often through the payment processor or a daily direct debit.
- Once the fixed total has been collected, the arrangement ends.
The RBA’s October 2025 Bulletin listed revenue-based financing among the alternative funding options that surveys show SMEs are increasingly exploring. It’s grown alongside online and card-terminal data that makes daily sales easy to verify.
Who suits revenue-based finance?
| Good fit | Poor fit |
|---|---|
| High card or online sales volume | Mostly invoiced B2B sales |
| Seasonal but predictable takings | Unpredictable, lumpy income |
| Short-term need: refurbishment, stock, a quiet season | Covering ongoing losses |
| No property, or property you don’t want to use | Large amounts better suited to secured loans |
How do you work out what it really costs?
Because pricing is often a fixed multiple of the amount advanced, the question isn’t “what’s the rate?” but “how much do I repay in total, and how fast?”. The faster your sales, the quicker you repay — which shortens the period but doesn’t reduce the dollar cost. Compare the total repayable with other options in dollars, and use the repayment comfort calculator with your expected term to see the effect on cash flow.
Check also:
- whether there’s a minimum collection regardless of sales;
- whether repaying early saves anything;
- fees for establishment, processing or switching payment providers;
- what counts as default, and the consequences.
Weighing a revenue-based advance against another option? Talk to a specialist first — no credit check to ask.
What do providers check?
Mostly sales data: monthly card or online sales, consistency, refunds and chargebacks, and how long you’ve been trading. They’ll also look at bank statements for existing debts and dishonours, and run credit checks on the business and directors. A business trading for a few months with patchy sales usually won’t qualify.
Why do revenue-based providers decline?
- Sales volume below the minimum, or too short a history.
- High refund or chargeback levels.
- Several existing daily-debit facilities already in place.
- A business that’s shrinking rather than steady.
- Industries the provider doesn’t fund.
What are the alternatives?
An online lender may offer a term loan or line of credit with fixed repayments that work out cheaper for a steady business. If you have property equity, a secured loan usually costs considerably less over the same period. For a seasonal dip, read who lends to businesses with irregular income. And sometimes the best first step is improving cash flow directly — business.gov.au’s cash flow tips on stock levels, supplier terms and upfront deposits are a useful checklist.
An illustrative example
Purely illustrative, with no real business: a suburban restaurant with strong card takings needs funds for a kitchen refit before its busy season. It has no property and doesn’t want a fixed weekly repayment through winter. A revenue-based provider advances a lump sum for a fixed total repayable, collected as a percentage of daily card sales. In quiet weeks less is collected; in busy weeks more. The owner compares the total repayable with an unsecured term loan from an online lender and an equipment finance quote for the new ovens, and ends up funding the ovens on asset finance and the rest through the revenue-based advance — keeping the total cost down while protecting the quiet months.
Which questions should you ask a provider?
- What is the fixed total I’ll repay, in dollars?
- What percentage of daily sales will be collected, and is there a minimum?
- What happens if sales drop sharply for a month?
- Can I repay early, and does that reduce the total?
Quick checklist before you apply
- Six to twelve months of card-terminal or platform sales statements.
- Business bank statements for the same period.
- A list of any existing advances or daily debits.
- What the money is for and when it will start paying for itself.
- A comparison quote from an unsecured lender or asset financier.
Above all, treat a revenue-based advance as a short-term tool. If you find you need a new advance as soon as the last one is repaid, that’s a sign the business needs a different structure — a line of credit, a longer secured loan or a closer look at margins — rather than another advance.
Would a revenue-linked repayment suit your takings?
If your sales come mostly through cards or online and you need a short-term boost, a revenue-based facility might fit — or there may be a cheaper alternative. Send a 60-second enquiry and a lending specialist will compare the realistic options with you. There’s no credit check to ask, your enquiry isn’t shopped around to a list of providers, and accurate details about your sales help us point you the right way the first time.
Frequently asked questions
What is a merchant cash advance?
An advance of cash repaid by an agreed share of your future card sales. The provider collects its share automatically until a fixed total amount has been repaid.
Is a merchant cash advance a loan?
It depends on how it's structured. Some are written as a purchase of future receivables rather than a loan. For you the practical questions are the same: how much do you receive, how much do you repay in total, and how is it collected.
What happens to repayments in a slow month?
If repayments are a percentage of sales, they fall when sales fall, which is the main advantage. Check whether there's a minimum monthly amount or a maximum term, because some products include these.
Who uses revenue-based finance?
Cafés, restaurants, retailers, salons, e-commerce stores and other businesses with high volumes of card or online payments and fairly predictable takings.
Can I take a merchant cash advance with an existing loan?
Sometimes, but providers look closely at existing daily or weekly debits. Stacking several short-term facilities can quickly strain cash flow.