By Elizabeth Carmichael
As a Texas-based entrepreneur, I’ve built and grown multiple businesses – from an oil and gas startup to a baseball training facility to a consulting firm serving clients across the state. Each of these ventures faced different challenges and required different solutions, but they all had one thing in common: When I needed capital to move forward, revenue-based financing was what made it possible.
I’ve used revenue-based financing, or RBF, four times, and each time it gave my business the flexibility to grow without sacrificing ownership or control. For many small business owners, traditional bank loans are often out of reach or take too long to process. During the COVID-19 pandemic and other periods of economic uncertainty, banks have tightened their lending practices, and many of us simply couldn’t afford to wait. Through RBF, I had funds in hand within days, not weeks or months, so I was able to act when the opportunity was there to invest in inventory, update technology, and expand operations.
RBF has worked well for many small businesses in Texas, but now there’s a move afoot in the Legislature to undermine it. Business owners across the state should speak up to make sure this vital financing option remains available.
Here’s why it works so well: RBF providers give you upfront capital in exchange for a percentage of your future revenue until an agreed-to amount is paid back. Because repayments are tied to your business’ revenue flow, if you have a slow month, your payments go down – and when things improve, you can pay off the balance faster. The flexibility of this model has been a game changer, because it meets small businesses where they are and adjusts as they grow.
Unlike traditional loans, RBF doesn’t require collateral, doesn’t depend solely on credit scores, and doesn’t come with rigid payment terms that can put undue stress on your business. I’ve always paid early or on time, and I’ve never felt like I was in over my head. That’s because RBF is built around how real businesses operate, including the natural ups and downs, seasonality, and the need to make quick decisions.
This kind of financing is especially important for Texas. We pride ourselves on being a state that supports small businesses, innovation, and independence. But access to capital remains one of the biggest barriers for entrepreneurs across the state. Traditional lenders rely heavily on credit scores and outdated financial metrics. RBF, on the other hand, looks at a business holistically – its revenue trends, market potential, and long-term viability. It doesn’t penalize entrepreneurs for not fitting a narrow mold. That flexibility makes a real difference for small business owners who are working hard to grow but may not meet the criteria traditional banks typically require.
