Revenue based financing in India: how RBF works and costs
Revenue based financing in India gives a business cash now in return for a fixed share of its monthly revenue, paid until a pre-agreed total is repaid. Providers include RBI-registered NBFCs and fintech firms that arrange loans for regulated lenders. It costs no equity, but the repayment cap can make it dearer than a bank loan.
By Akshay Kendurkar, CEO, MyStartupValley
Equity costs you ownership. A bank loan wants collateral and a fixed monthly payment. Revenue based financing sits between them: you repay out of sales, a little more in a good month and a little less in a slow one.
For a founder with steady revenue and no appetite for dilution, that's attractive. But the cost isn't printed as an interest rate, so it's easy to misread. Here's how it works in India, who offers it and how to compare an offer.
What is revenue based financing and how does it work?
Revenue based financing, or RBF, gives a business money now in return for a fixed percentage of its monthly revenue, paid until a pre-agreed total is repaid. That total is the repayment cap, usually written as a multiple of the amount advanced. Payments move with sales, so there's no fixed monthly instalment.
Recur Club's guide to RBF, written by a provider, describes the steps: you share financial data, the provider studies revenue trends and consistency rather than collateral, and the offer sets two numbers. One is the share of monthly revenue you'll pay. The other is the cap, which the guide illustrates as 1.3x to 2x the funding.
A worked example, from the provider
The same guide gives this case. A D2C brand with monthly revenue of ₹40 lakh takes ₹1 crore, repays 8% of monthly revenue, and has a cap of ₹1.6 crore. If revenue rises to ₹50 lakh, that month's payment is ₹4 lakh. If it drops to ₹25 lakh, the payment is ₹2 lakh.
Our arithmetic, not the provider's: at a steady ₹40 lakh a month, 8% is ₹3.2 lakh, so reaching the ₹1.6 crore cap would take 50 months. Grow faster and you reach it sooner. That changes the cost, as the next section shows.
How much does revenue based financing cost compared with equity and venture debt?
RBF costs no equity, but its cash cost can be high. The cap is fixed, so the faster you repay, the higher the effective annual rate. Venture debt charges fixed interest plus a small equity kicker. Equity charges a permanent share of the company. Which is cheapest depends on your growth and your plans.
Think of the cap as a fee. On a ₹1 crore advance with a ₹1.6 crore cap, the fee is ₹60 lakh whether you take one year or four to pay it. Spread over one year, that's a very expensive loan. Spread over four, much less so.
| Equity | Venture debt | Revenue based financing | |
|---|---|---|---|
| What you give | A share of the company | Fixed interest, often warrants | A share of monthly revenue until the cap |
| Repayment | None | Fixed instalments over 18 to 36 months | Moves with revenue |
| Usually needs | A growth story investors back | An equity round already raised | Steady, traceable revenue |
| Main cost driver | Valuation | Rate and warrant terms | Cap and speed of repayment |
The venture debt tenor is from Nishith Desai Associates' venture debt explainer. For how those loans are structured, see venture debt in India explained.
The multiple tells you how much you'll repay. Only the timeline tells you what it costs.
Who offers revenue based financing in India?
RBF in India comes from two kinds of provider: NBFCs registered with the RBI that lend on their own books, and fintech firms that source and service loans for banks and NBFCs as lending service providers. Some fintech firms have set up their own NBFC to lend directly. Check which kind you're dealing with.
One example of that shift: Business Today reported in May 2023 that RBF provider GetVantage had received an NBFC licence from the RBI, letting it serve customers directly instead of acting only as a lending service provider. Its founder said being unlicensed "is not an option".
Why it matters to you: the regulated lender on the loan agreement is the one whose RBI obligations protect you. Ask whose name is on the sanction letter, and check that lender's registration on the RBI's website.
What do RBI rules say about revenue based financing?
RBI rules don't name revenue based financing as a separate product. When a bank or NBFC makes the loan, its normal lending rules apply, and the RBI's Digital Lending Directions, 2025 cover loans arranged through apps and websites. Those rules give you a Key Fact Statement with the APR and a cooling-off period.
The Digital Lending Directions, issued on 8 May 2025, require the lender to give a Key Fact Statement and to let a borrower exit a digital loan during a cooling-off period of at least one day by repaying the principal and the proportionate APR, without penalty. Check the RBI's site for the latest consolidated version.
The RBI's Key Facts Statement circular of 15 April 2024 applies to all retail and MSME term loans sanctioned from 1 October 2024. The APR must include all charges the lender levies, and the statement stays valid for at least three working days for most loans.
Whether your RBF deal falls under these rules depends on how it's structured. Ask for the Key Fact Statement anyway. If a provider won't give you an APR, that tells you something.
Which businesses suit revenue based financing?
RBF suits businesses with steady, traceable revenue and enough gross margin to pay a share of sales every month: subscription software, consumer brands with repeat buyers and other companies whose income shows clearly in bank statements. It suits pre-revenue startups and lumpy, project-based businesses poorly.
GetVantage listed B2B SaaS, cleantech, D2C, EV, e-commerce and quick-service restaurants among the sectors it funds. Recur Club's guide lists working capital, hiring, marketing and expansion as typical uses. The best fit is spending that earns itself back within the repayment period.
Two checks before you sign. First, your margin: repayments come out of revenue, not profit, so a thin-margin business can find a revenue share squeezes cash hard. The unit economics checks investors run apply here too.
Second, your records. Providers underwrite on bank statements, accounting records and connected financial data, so clean books help. How investors verify startup revenue shows what a lender will look for, and consumer brands can also read D2C startup due diligence.
For bank and NBFC loans without collateral, the government's credit guarantee scheme for startups is worth comparing. This post explains how RBF works; it isn't financial advice. Compare offers on APR, and ask a chartered accountant to model repayments against your cash flow.
Questions
What is revenue based financing in India?
Revenue based financing gives a business money now in exchange for a fixed share of its future monthly revenue, paid until an agreed total, the repayment cap, is reached. Payments rise in strong months and fall in weak ones. You give up no equity, and providers underwrite mainly on revenue rather than collateral.
How much does revenue based financing cost?
It depends on the cap and how fast you reach it. Recur Club's own guide gives caps of 1.3x to 2x the amount advanced as an example range. A cap repaid quickly costs more per year than the same cap repaid slowly, so ask each provider for the annual percentage rate before you sign.
Is revenue based financing regulated by the RBI?
RBI rules don't treat it as a separate product. When a bank or NBFC makes the loan, its normal lending rules apply. The RBI's Digital Lending Directions, 2025 cover loans made through apps and websites, including a Key Fact Statement with the APR and a cooling-off period of at least one day.
Which businesses suit revenue based financing?
Businesses with steady, traceable revenue and healthy gross margins: subscription software, consumer brands with repeat buyers, and other companies whose sales show up month after month in bank statements. Pre-revenue startups and businesses with lumpy, project-based income usually suit equity or other debt better.
Sources: Recur Club, Revenue-Based Financing: A 2026 Guide for Flexible Startup Funding (provider guide), 2026 · Business Today, GetVantage becomes first RBF start-up to get NBFC licence, 4 May 2023 · Reserve Bank of India, Reserve Bank of India (Digital Lending) Directions, 2025, 8 May 2025 · Reserve Bank of India, Key Facts Statement (KFS) for Loans and Advances, 15 Apr 2024 · Nishith Desai Associates, Onshore Funding Routes: Venture Debt, 10 Nov 2020
For more on how startup funding works in India, read the MyStartupValley blog or visit mystartupvalley.com.