Why it matters
Standard RBF: borrow $1M, repay $1.5M (1.5× cap) by paying 8% of monthly revenue. Total payback is fixed; the only variable is how fast you pay it back. Predatory RBF: borrow $1M, repay 8% of revenue 'until satisfied,' with 'satisfied' tied to vague performance metrics or extending into perpetuity. Founders sign these expecting a 12–18 month repayment window and find themselves five years in still paying 8% of revenue — effectively a permanent royalty on the business. The math is hidden by complex language about 'remittance period extensions,' 'performance multipliers,' and 'reset triggers.'
How to negotiate
Insist on a hard total repayment cap expressed as a multiple of principal (1.3×–1.6× is market for healthy SaaS). Cap the repayment period at 36 months maximum — anything longer is structured to outlast the company's natural growth curve. Verify there are no 'multiplier' or 'reset' clauses that can extend the cap or restart the clock. If the RBF provider can't or won't quote a fixed maximum payback in dollars, walk away — they're not lending, they're acquiring a perpetual revenue share.
Example language
How this clause typically appears in a debt agreement or note. Read it carefully — the language that triggers default is often buried in routine paragraphs.
Borrower shall remit eight percent (8%) of monthly Net Revenue to Lender each month until Lender has been Fully Repaid. 'Fully Repaid' shall mean Lender has received aggregate payments equal to the Repayment Multiple, subject to adjustment based on Borrower's performance against the Performance Targets set forth in Schedule A.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific facility may have nuances that change the analysis. Always review your debt documents — including covenants, intercreditor agreements, and personal guarantees — with qualified legal counsel before signing.