Revenue-based financing

The repayment cap: the total you repay, fixed on day one.

In revenue-based financing, the cap is the number that matters most. It tells you the full cost of the money before you sign.

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What is the repayment cap in revenue-based financing?

Short answer: The repayment cap is the total you will repay on a revenue-based advance, calculated as the advance times an agreed multiple. A $40,000 advance at a 1.20 multiple has a $48,000 cap, and the agreement ends once payments reach it. Because the cap is fixed, the cost in dollars is known from the start.

Key facts

Cap = advance × multiple
The agreement ends at the cap
Cost is known on day one
Check for fees outside the cap

What the cap is

The repayment cap is the total amount you will repay on a revenue-based advance. It is calculated as the advance multiplied by an agreed multiple. A $40,000 advance at a 1.20 multiple has a cap of $48,000. Once payments reach $48,000, the agreement is complete.

Because the cap is fixed, the cost in dollars is known from the start. That is different from a loan, where interest accumulates over time and the total depends on how long the balance is outstanding.

Why the cap protects you

You can budget the full cost in advance.
A slow month extends the timeline without adding cost.
You can compare offers directly by their caps for the same advance.
There is no compounding on an unpaid balance.

What to check in the agreement

That the cap is stated in dollars, not only as a multiple.
Whether any fees are added on top of the cap.
What happens if revenue falls to zero for a period.
Whether there is a minimum payment regardless of revenue.
Whether paying early reduces the cap.

Cap vs factor rate

A merchant cash advance uses a factor rate to set the total to be remitted from future receivables. The arithmetic is similar: advance times factor equals total. The difference is mainly in how the payment is collected and calculated, as a share of card sales or of all revenue, and in the legal structure of the agreement. Either way, compare totals in dollars.

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 the repayment cap explained 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

Can the cap ever increase?

It should not under normal terms. Check what the agreement says about defaults and fees.

Is a minimum payment common?

Some agreements include one. Read it, because it reduces the flexibility that makes revenue-based financing attractive.

Does paying faster cost less?

Not unless the agreement offers an early payoff discount. Ask.