Revenue-Based Financing for Bars and Taverns
Revenue-based financing gives a bar a lump sum repaid as a set percentage of sales, so a dead week in January sends the funder less and a playoff run sends more. It fits bars whose sales swing with events, weather and the calendar. The total owed is fixed the day you sign, so a strong season ends it sooner without making it cheaper.
Why a percentage fits a bar's calendar
Events drive the spikes
Big games, holidays and local festivals bring nights that outsell a normal week. A share of sales takes more on those nights and less on quiet ones.
Weather matters for patios
A rainy spring keeps the patio empty. A fixed debit ignores that; a percentage doesn't.
A 9% share through a slow month
Take $70,000 of average revenue, $38,000 advanced and a $50,540 repayment cap. 9% of sales goes back each month.
| Month | Revenue | Remittance at 9% | Remittance as a share |
|---|---|---|---|
| An average month | $70,000 | $6,300 | 9.0% |
| A slow month, 20% under average | $56,000 | $5,040 | 9.0% |
Expect about 8 months to hit the cap at average revenue, with a slow month sending only $5,040. BLS headcount for drinking places (NAICS 722410) moves just 5.1 points over the year, so use your own thinnest month here.
What bars fund with it
- A patio, rooftop or outdoor bar build.
- A kitchen addition to bring in food revenue.
- A sound system or screens to draw sports crowds.
- Marketing a new event night.
Details to pin down
What the funder calls revenue
Tips on cards pass through the account to staff. Ask for them to be excluded, along with sales tax, so the percentage lands on what the bar keeps.
How the share is collected
Some funders take a split from card batches, others debit an estimate from the bank account and reconcile. A split from batches follows sales closely; a monthly reconciliation can lag in a slow stretch.
Any floor
Check whether there's a minimum payment and how it compares to your weakest week.
Where a line of credit wins
Distributor payments and small recurring gaps usually cost less on a line of credit, if the bar qualifies. Revenue-based financing is better suited to a project where new sales repay the money.
Quick answers
How does revenue-based financing work for a bar?
A funder provides a lump sum and takes a fixed percentage of sales until a set total is repaid. Slow weeks mean smaller payments, busy weeks pay it down faster. Ask the funder to exclude card tips and sales tax from revenue, and check for a minimum payment.
What should a bar use revenue-based financing for?
Projects that bring new sales, like a patio build, a kitchen addition or screens for sports crowds. For regular distributor payments or short gaps, a line of credit usually costs less, if the bar meets its requirements.
Do tips count as revenue in a bar's revenue-based financing?
They shouldn't, but it depends on the contract. Card tips pass through the business account on their way to staff. Ask for tips to be excluded in writing, so the percentage applies only to the money the bar actually keeps.
More for bars and taverns
- Same-day merchant cash advance for bars and taverns
- Second position MCA for bars and taverns
- MCA consolidation for bars and taverns
- Business line of credit for bars and taverns
- How funders read bars and taverns
- Revenue-based financing: how it works
Run your own numbers with the factor rate calculator.
Want to see what fits a bar like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.