Revenue-based financing

Paying off revenue-based financing early: when it saves money.

With a fixed cap, paying early does not save money by itself. A discount does. Here is how to tell the difference.

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Does paying off revenue-based financing early save money?

Short answer: Usually not, because the total is fixed by the cap: paying off in four months instead of eight costs the same in dollars unless the agreement includes an early-payoff discount. Some funders offer a reduced payoff if the balance is cleared within a set window, so ask for the terms in writing.

Key facts

The cap fixes the total cost
Early payoff saves only with a written discount
Discounts often shrink over time
Get a dated payoff figure first

Why the cap changes the math

With a loan, paying early saves interest because interest accrues over time. With revenue-based financing, the total is fixed by the cap. Paying it off in four months instead of eight usually costs the same in dollars unless the agreement includes an early payoff discount.

Some funders offer a reduced payoff amount if the balance is cleared within a set window. That discount is the only way early payoff reduces cost. Ask whether one is available and get the terms in writing.

When early payoff is still worth it

You want to free up the monthly payment for a new investment.
You want to qualify for different financing, such as a bank loan, that requires no outstanding advances.
You are selling the business or changing ownership.
You simply want to be finished and have the cash to do so.

When it is not

Paying early would leave the business short of working capital.
No discount is available and you have a better use for the cash.
You would take another advance to pay off the first.

How to request a payoff

Ask for a written payoff letter showing the amount needed to close the agreement, the date it is valid until and how to pay. Confirm that any registrations against the business will be discharged once paid. Keep the payoff confirmation with your records.

Where Canadian files usually start

Monthly revenueTypically from around $20,000 a month in deposits for Canadian files. The exact line varies by funder and by file.

Time in businessTypically about 12 months. Newer businesses can be reviewed, but the options narrow.

Account healthLimited low-balance or negative days. Funders read the last few months of bank statements for this.

CreditScores from 500 are considered. A score of 600 or higher opens more options and better offers.

DocumentsA signed application and recent business bank statements, typically the last four months.

Existing advancesFiles with an existing advance can be reviewed, including second position.

Next step: apply once with a signed application and your last four months of business bank statements. The file is read for paying off RBF early and matched to the structure that fits, whether that is revenue-based financing, a merchant cash advance or a smaller first advance that builds history. Questions first? Call (305) 384-8391.

Sources and review

Payments Canada

Reviewed by the Merchant Fund Express team on October 12, 2026. Official pages checked as of that date.

Common questions

Does paying early lower the cost?

Only if the agreement includes an early payoff discount.

Will paying early help me get a bank loan?

It can, since lenders often look at outstanding obligations.

How long does a payoff take?

Usually days. Ask for a payoff letter and confirmation that registrations will be discharged.