How does revenue-based financing work?
A funder provides a set amount and collects a fixed percentage of your deposits, or a set payment that tracks them, until an agreed total is repaid. When collections are strong, the balance falls faster; in a slow stretch, payments shrink. The total amount owed is usually fixed at signing rather than growing with time.
Because repayment follows deposits, funders focus on bank statements and the consistency of collections more than on collateral. Payments are often collected weekly or even daily, which is very different from a monthly equipment or term loan payment. Read the agreement carefully for how the percentage is calculated and what happens if deposits drop.
When can it make sense for a dental office?
It can fit a short-lived, revenue-producing need when time or documentation rules out cheaper options. Examples include covering a hygiene expansion while a new hygienist's schedule fills, or funding a new-patient campaign ahead of a busy season. The need should pay back well within the repayment period.
- A practice with steady collections but a thin credit file or recent credit event.
- A short gap where a term loan would take too long to close.
- An owner who values payments that flex with collections during uneven months.
Requirements vary by product and funder; many look at time in practice, monthly revenue and credit.
| Feature | Revenue-based financing | Term loan |
|---|---|---|
| Repayment | Share of deposits, often weekly or daily | Fixed monthly schedule |
| Typical cost | Higher | Lower for qualified borrowers |
| Documents | Mostly bank statements | Tax returns, reports, project details |
| Best use | Short-term, revenue-producing needs | Long-lived projects |
When should a dental practice avoid it?
Avoid revenue-based financing for long-term needs such as a CBCT, a build-out or a practice purchase, and avoid it when the practice is already struggling to cover overhead. The higher cost and frequent payments can squeeze cash flow further. If a cheaper secured or longer-term option is available, it usually wins.
- Equipment: use dental equipment financing, which spreads the cost over the asset's life.
- Acquisitions and build-outs: use a term loan.
- Recurring timing gaps: a line of credit is often cheaper.
- Stacking: taking a second or third advance on top of existing ones compounds the daily burden quickly.
How should I compare the cost?
Look at the total repayment amount against the amount received, the expected repayment period and payment frequency, not just the factor or percentage quoted. A shorter expected period makes the effective cost higher. Ask whether early repayment reduces the total, because on many agreements it does not.
Model a slow month too. If August collections drop because patients travel, check what the payment does and whether the rest of your obligations still fit. Put every offer side by side with the same numbers before choosing.
What if I already have daily advance payments?
If existing payments are straining the practice, the goal should be to lower your payment or stretch the term, not to add another advance on top. Tell any funder about current obligations upfront; they are part of every review, and hiding them usually ends the process later.
A funding specialist can review your deposits and current agreements and explain what options may be available. Share bank statements and agreement summaries only, never patient information.
Frequently asked questions
Is revenue-based financing a loan?
Structures differ. Some are purchases of future receivables rather than loans, which changes how the agreement is written and regulated. Read the contract and ask your attorney or CPA about the specifics; SmileBright Capital does not give legal or tax advice.
Why is it more expensive than an equipment loan?
The funder is repaid from future deposits with little or no collateral and takes on more risk, and terms are short. That combination usually produces a higher total cost than financing secured by equipment or a longer term loan.
Can a dental startup use revenue-based financing?
It is usually a poor fit, because repayment depends on deposits a new office does not have yet. Opening financing with built-in ramp-up working capital typically serves a startup better. See the dental startups page for how new offices are commonly funded.
Can I lower my payment later?
Some agreements adjust with deposits automatically. Beyond that, options that lower your payment or stretch the term may be available depending on your profile and existing obligations. Ask before signing how adjustments are handled if collections fall.
Compare before you commit
Apply once and review revenue-based and lower-cost options from our funding partners side by side.
Updated September 14, 2026 · SmileBright Capital Funding Team