All Business Lending & Fintech

A new study from researchers affiliated with Harvard Business School explains why revenue-based financing (RBF) has become a powerful alternative for small and mid-sized businesses that struggle to qualify for traditional loans. As businesses adopt digital tools like point-of-sale systems, digital payments, and analytics software, their revenue becomes easier to verify, track, and forecast. This makes them more attractive to RBF investors, who rely on real-time revenue data instead of credit scores or collateral. Using proprietary data from a major RBF investor and a real-world policy rollout in China, the study finds that more digitized businesses are significantly more likely to receive RBF funding—even if their financial performance is weaker. In short, digitization itself can help businesses unlock capital that would otherwise be unavailable.

Key Takeaways

1. Digitization Directly Increases Access to RBF

Businesses that use digital payment systems, POS software, and analytics tools are far more likely to be approved for revenue-based financing than those that do not.

2. Revenue Transparency Replaces Traditional Credit Signals

RBF investors care less about credit scores and more about visible, verifiable revenue. Digitized revenue reduces guesswork and risk for the funder.

3. Digitization Helps Even “Weaker” Businesses Get Funded

One of the most important findings: digitization helps businesses with lower revenue or margins, not just top performers. This makes RBF more inclusive than traditional lending.

4. Investors Value Three Things Above All Else

Digitized businesses score higher because they:

• Show clearer revenue history

• Allow easier monitoring after funding

• Demonstrate better future growth potential

5. RBF Works Best When Revenue Is Automatically Trackable

Daily or real-time revenue sharing only works when payments flow through connected systems. Manual or cash-heavy businesses face a major disadvantage.

DOWNLOAD THE STUDY FROM THE WEBSITE HERE