Revenue-based financing

Revenue-based financing for SaaS: growth capital paid from subscriptions.

Monthly recurring revenue is the cleanest signal a funder can read. Here is how a Canadian SaaS file is sized and repaid without giving up equity.

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Why does revenue-based financing suit SaaS companies?

Short answer: A software company billing customers monthly already produces predictable, growing deposits, the pattern a revenue-based funder wants. Because the payment is a share of revenue, it rises as customers sign and eases in a month when churn is higher than usual, and founders keep their equity. It suits funding sales hires, marketing and product work.

Key facts

Recurring billing gives predictable deposits
Payments rise with growth, ease with churn
No equity or board seats
MRR, churn and net retention are read

Why SaaS and revenue-based financing fit

A software company that bills customers every month already produces the pattern a revenue-based funder wants to see: predictable deposits that grow over time. Because the payment is a share of revenue, it rises when the company signs customers and eases in a month when churn is higher than usual. That flexibility is the main reason founders choose it over a term loan with a fixed instalment.

The other reason is ownership. Equity rounds dilute founders permanently. A revenue-based advance is repaid in full and then it is over, which suits companies that are growing steadily but do not want to raise a priced round to fund the next six months of sales and marketing.

What gets read in a SaaS file

Monthly deposits from the payment processor or invoicing tool, and how consistent they are month to month.
Growth in deposits across the last several months, not one exceptional month.
Refunds and chargebacks, which show up as reversals in the statements.
Annual-plan prepayments, which inflate one month and should be pointed out so they are not read as a run rate.
Payroll and hosting costs relative to deposits, which show how much room a new payment has.

Funders working from bank statements do not need access to your billing dashboard, but a one-page summary of MRR, logo count and churn helps them read the deposits faster.

Sizing it sensibly

The common mistake is to size the advance to the biggest number offered. A better approach is to size it to a specific plan: the sales hire, the campaign or the integration that should lift MRR, and to check that the monthly payment at the agreed share leaves the company cash-positive in an average month.

If the plan is a marketing push, set a budget and a payback period for customer acquisition before you take the money. If new customers take eight months to pay back their acquisition cost, a twelve-month repayment window is tight; a smaller advance may serve the plan better.

When it is the wrong tool

Pre-revenue companies, or companies with only a few months of billing, usually need equity or grants first.
Companies burning heavily with no path to profitability may find the payment competes with survival spending.
If annual contracts are paid up front, a deposit-based review may understate or overstate the real run rate; explain the billing mix.

A worked example

Illustrative arithmetic: a SaaS company with $60,000 monthly deposits

Advance: $90,000. Repayment cap: $90,000 × 1.18 = $106,200.
Cost of the capital: $16,200, fixed in dollars from the start.
Payment: 10% of monthly revenue. At $60,000 a month that is $6,000, so about 17.7 months to reach the cap.

Every figure on this page is illustrative arithmetic in Canadian dollars. It is not an offer, a quote or a promise of approval.

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 rBF for SaaS companies 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

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

Common questions

Do I need a minimum MRR?

There is no single line, but Canadian files typically start from around $20,000 a month in deposits. Growth and consistency matter as much as the number.

Will you need access to Stripe or my billing system?

The review is built on business bank statements. A short MRR and churn summary is helpful context but not required.

Does revenue-based financing dilute founders?

No. It is repaid from revenue up to a fixed cap and does not take equity.