E-commerce and payment platform finance
Financing offered by the platform you sell through or take payments with, worked out from your sales there and repaid automatically as a share of each sale. Quick and simple, but only for its own sellers, and a fixed fee can make it expensive.
- No security
How it works
Some payment processors and online sales platforms use what they already know about your business, such as your card receipts or sales through them, to offer you financing. The FTC described this in 2020 as one of the newer kinds of small business finance. You can only get it from a platform you already use, and the offer is usually made inside your account.
How it usually works, as the Federal Reserve described a sample of this kind of product: you get a lump sum and pay one fixed fee, agreed up front, instead of interest. A percentage of each sale you make through the platform is taken automatically until the lump sum and the fee are repaid. In the Fed's example, a business with $500,000 of yearly sales borrowing $50,000 could choose to repay with 30%, 20% or 10% of each sale, for a fee of $2,300, $3,500 or $7,700: a lower share of each sale means slower repayment and a bigger fee. Some products also set a minimum payment over a period. State laws call financing repaid as a share of sales "sales-based financing."
Working out the cost: because the fee is fixed, the yearly cost depends on how fast your sales repay it. Repaid in a few months, a fee that looks small can be a high annual rate. The Fed found that small business owners often mistook the "repayment percentage" for an interest rate, which it is not. Ask for the estimated APR at your expected sales, or work it out, and compare it with a line of credit or a loan.
No public body publishes the terms platforms offer, and they change. Read your platform's own terms for how much you can get, how long you must have sold through it, the fee, the share of sales taken, any minimum payments and what happens if you stop selling there.
Federal and state rules: federal Truth in Lending rules do not cover business finance, and the FTC Act bans unfair or deceptive practices. Several states require providers of sales-based financing to disclose the cost before you sign; see the state rules below. Most of these laws do not cover banks and credit unions, so check who the lender named in your agreement is.
Upsides and downsides
Upsides
- Quick, with an offer based on sales data the platform already has
- Payments fall when sales fall
- No shares given up
Downsides
- Only from a platform you already sell through or take payments with
- The fixed fee can mean a high yearly cost, and the cost can be hard to compare with a loan
- Takes a share of your sales before you can use it
Risks
- Moving to another platform, or a fall in sales there, can trigger minimum payments or other terms in the agreement
- Taking more financing to keep up with payments can lead to a debt spiral
What it costs
- How it is priced
- A fixed fee agreed up front, repaid with the amount advanced as a share of your sales through the platform
- Costs that are easy to miss
- The fee is the same however quickly you repay, so the yearly cost is high when sales are strong
- A share of each sale is taken before you can use it
- Minimum payment rules on some products
Based on your sales through the platform. The Federal Reserve says sales-based financing is typically under $100,000; in its sample product, a business with $500,000 of yearly sales borrowed $50,000.
Have an offer? Cost of a merchant cash advance or revenue-based finance: work out the estimated APR and total cost
Does it fit?
Could fit when
- You sell to consumers online or by card and need money for stock or marketing
Unlikely to fit when
- The business has no sales yet
- Your customers pay by invoice, not online or by card
- A bank, SBA or community loan or line of credit could cover the need
- Your margins are thin or the business is making a loss
- You do not sell through a platform that offers financing
Who can use it
- Business types: Sole proprietorship, Partnership, LLC, S corporation, C corporation, Benefit corporation, Cooperative
- Needs sales (revenue)
- You already sell or take payments through a platform that offers financing
- A history of sales through that platform, as its own terms set out
Am I ready?
What a provider is likely to ask for. Tick what you have. Your ticks stay in this browser and nothing is stored. Checklist for all alternative and fast debt
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- Revenue records
- True cost worked out
- Contract checked
Regulation and protections
Regulators: Federal Trade Commission (FTC); State lending and financial regulators.
Who runs it: Private providers, nationwide.
Federal Truth in Lending rules do not cover business finance. The FTC Act bans unfair or deceptive practices. Protections depend on your state; see below.
Rules that differ by state
- California: A provider that is not a bank or credit union must give you a disclosure before you sign an offer of $500,000 or less, showing the funds you get, the total dollar cost, the estimated term, the payments, the prepayment rules and an estimated APR, and must get your signature on it. The law covers purchases of a business's future receivables and cash receipts as well as loans. Since January 1, 2026, a provider that quotes a price during an application must also state the APR. (California Financial Code, Division 9.5: Commercial Financing Disclosures (sections 22800 to 22807); DFPI: commercial financing disclosure regulations effective December 9, 2022)
- New York: A provider that is not a bank or other financial institution must disclose, when it makes a specific offer of sales-based financing of $2.5 million or less, the amount you get, the finance charge and an estimated APR calculated under federal Truth in Lending rules from your projected sales. Financing repaid as a percentage of revenue counts as sales-based financing. (New York Financial Services Law section 801: definitions (sales-based financing); New York Financial Services Law section 802: exemptions; New York Financial Services Law section 803: sales-based financing disclosures)
- Virginia: Providers and brokers of sales-based financing, which includes financing repaid as a percentage of revenue, must register with the State Corporation Commission. For a business based in Virginia, a provider must disclose, with each offer of $500,000 or less, the amount, the finance charge, the total repayment, the estimated number of payments, other fees, any collateral or security interest, and any payment to a broker. Confessions of judgment are not allowed. (Code of Virginia, Chapter 22.1: Sales-Based Financing Providers (sections 6.2-2228 to 6.2-2238))
- Utah: A provider that makes more than five commercial financing deals a year in Utah must register with the state and, before you sign a deal of $1 million or less, disclose the funds you get, the total you will pay, the total dollar cost, the payments (or the estimated first payment, if payments vary) and any prepayment costs. The law covers loans and purchases of receivables. No APR is required. (Utah Code Title 7, Chapter 27: Commercial Financing Registration and Disclosure Act)
- Florida: For deals of $500,000 or less made since January 1, 2024, a provider that is not a federally insured bank or credit union must disclose in writing, at or before signing, the funds provided, the amount actually paid out, the total you will pay, the total dollar cost, how payments are worked out and any prepayment costs. The law covers loans and purchases of receivables. No APR is required. (Florida Statutes, chapter 559, part XIII: Florida Commercial Financing Disclosure Law (559.961 to 559.9615))
- Texas: Since September 1, 2025, providers and brokers of commercial sales-based financing, which includes financing repaid as a percentage of revenue, must register with the Office of Consumer Credit Commissioner; those already in business then have until December 31, 2026. Offers of less than $1 million need cost and payment disclosures that you sign. Confessions of judgment are void, and a provider can set up automatic withdrawals from your bank account only if it holds a first-priority security interest in that account. (Texas HB 700 (2025), enrolled: Finance Code Chapter 398, commercial sales-based financing)
- Connecticut: Since July 1, 2024, a provider of sales-based financing of $250,000 or less (repaid as a share of your sales or revenue, or by fixed payments adjusted to a share of sales) must give you, with each specific offer, a disclosure in the state's format showing the amount, the amount paid out, the finance charge, the total repayment, the estimated term, the payments, other fees, prepayment charges, any collateral and any payment to a broker, and get your signature on it. No APR is required. Providers and brokers must register with the Department of Banking. An offer cannot be withdrawn or changed until midnight on the third day, except after underwriting checks or at your request, and the contract cannot waive your right to notice and a court hearing before the provider seizes assets. Banks and credit unions are exempt. (Connecticut General Statutes, chapter 669, part XVI: commercial financing (sections 36a-861 to 36a-872); Connecticut Department of Banking: guidance on Public Act 23-201 (June 10, 2024, updated August 1, 2024))
- Georgia, Kansas: Since January 1, 2024 in Georgia and July 1, 2024 in Kansas, a provider that makes more than five commercial financing deals a year in the state must disclose, before or when you sign a deal of $500,000 or less, the funds provided, the amount actually paid out, the total you will pay, the total dollar cost, the payments and any prepayment costs. No APR is required. The law covers purchases of a business's receivables as well as loans. Banks and credit unions, and financing secured by real property, are not covered. Brokers may not charge you an upfront fee. The state attorney general enforces the law; it gives you no right to sue. (Georgia SB 90 (2023), as passed (Act 78): commercial financing disclosures, O.C.G.A. 10-1-393.18; Georgia General Assembly: SB 90 (2023-2024 session), status history (Act 78, effective January 1, 2024); Kansas Statutes 75-783: Commercial Financing Disclosure Act, definitions (2024); Kansas Statutes 75-784: required disclosures (2024); Kansas Statutes 75-785 to 75-787: exceptions, brokers and penalties (2024))
- Missouri: A provider that makes more than five commercial financing deals a year with Missouri businesses must disclose, at or before signing a deal of $500,000 or less, the funds provided, the amount actually paid out, the total you will pay, the total dollar cost, the payments and any prepayment costs. No APR is required. The law covers purchases of a business's receivables as well as loans. Banks and credit unions, financing secured by real property, and leases are not covered. Brokers must register with the Division of Finance and hold a $10,000 bond. The law's start date was February 28, 2025, unless the Division chose to make rules first; the Division publishes the registration form under it. The attorney general enforces the law; it gives you no right to sue. (Revised Statutes of Missouri 427.300: Commercial Financing Disclosure Law; Missouri Division of Finance: consumer credit licensing (commercial financing registration and bond forms))
Types of provider: Payment processors and online sales platforms that offer financing to their own sellers, and the lenders they work with.
Also consider
What has changed
No changes since this page was published. It was last checked against its sources on October 20, 2026.
Sources
- FTC: "Strictly Business" forum, staff perspective (February 2020) · checked October 20, 2026
- Federal Reserve: Browsing to Borrow, "Mom & Pop" small business perspectives on online lenders (2018) · checked October 20, 2026
- Federal Reserve: Consumer & Community Context, March 2025 (small business financing products) · checked October 20, 2026
- New York Financial Services Law section 801: definitions (sales-based financing) · checked October 17, 2026
- 12 CFR 1026.3 (Regulation Z): exempt transactions, including business credit · checked October 17, 2026
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