Some Canadian grants are not truly “free money.” Instead of fixed loan payments, they use revenue-based repayment. This means your repayments depend on your business revenue after the project ends. This structure is common in repayable contribution agreements used by federal and provincial programs that support growth, innovation, and commercialization.
Understanding revenue-based repayment helps you avoid cash flow surprises and decide if a repayable grant fits your business needs.
Revenue-based repayment (RBR) is a repayment model tied directly to your business revenue. You repay a percentage of eligible revenue once your business starts earning income after the funded project.
In Canada, RBR is most often used in repayable contribution agreements, not traditional bank loans. Government funding rules apply, not bank loan rules.
Key features include:
Terms vary by program, but most Canadian revenue-based repayment agreements follow similar steps.
Most agreements include:
If you do not meet the threshold in a given year, you may not owe a payment for that period.
Typical structures include:
For example, if your agreement requires 3% of eligible revenue and your business earns $1,000,000 in a reporting year, your repayment would be $30,000 for that year.
Repayment usually stops when:
Some agreements allow partial forgiveness if revenue targets are not met by the end of the term, but this depends entirely on the program terms.
Revenue-based repayment helps reduce risk for growing businesses.
From the government’s perspective, it:
For businesses, it:
GrantHub lists programs with revenue-based repayment options so you can see which ones fit your business profile.
Revenue-based repayment is not interest-bearing debt. Payment timing and amounts depend on revenue, not a fixed schedule.
Some agreements define revenue narrowly. Using the wrong figures can lead to compliance issues or audits.
Even if you owe nothing in a given year, you usually must still submit annual financial reports.
Repayment obligations can last many years. This matters if you plan to sell the business or raise investment.
Before you apply for a Canadian program with revenue-based repayment, take these steps:
GrantHub tracks hundreds of active grant and contribution programs across Canada—including which ones are repayable and how repayment works—so you can compare options before applying.
Q: Is revenue-based repayment the same as a loan?
No. It is a repayable contribution, not a commercial loan. There is usually no interest, and payments are tied to revenue performance rather than a fixed schedule.
Q: What happens if my business never becomes profitable?
Profit is not always the trigger—revenue is. If you never reach the required revenue thresholds, payments may be reduced or paused, depending on the agreement terms.
Q: Do I still have to report if I owe nothing?
Yes. Most contribution agreements require annual financial reporting even when no repayment is due.
Q: Can revenue-based repayment be renegotiated?
Generally no. Terms are set in the contribution agreement, although some programs allow amendments in exceptional circumstances.
Q: Will this affect my ability to get other funding?
It can. Investors and lenders often treat repayable contributions as quasi-debt, so disclosure is important.
Revenue-based repayment can be a smart option if your business expects growth but needs flexibility in the early years. The key is knowing the terms before you apply and planning for long-term reporting and repayment. Use GrantHub’s eligibility matcher to filter programs by province and funding type, including those with repayable or revenue-based terms.
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