What is a revenue-sharing note in simple terms?

You lend a business money and, instead of a fixed interest rate, it pays you a slice of its sales every quarter, say 4 percent of revenue, until you have received a set amount back, usually 1.5 times what you put in. If sales are strong you are repaid quickly and earn a high annual return; if sales are weak it takes years and the annual return is low, even though the dollar total is the same. It is a loan whose speed, not its size, floats with the business.

What does a 1.5x payment multiple actually earn per year?

It depends on how fast the 1.5x arrives. On AltStreet's arithmetic for a note that starts sharing a year after the close and then pays evenly each quarter: repaid over two years, about 21 percent a year; over three years, 17 percent; over four, 14 percent; over five, 12 percent; over seven, under 10 percent; over nine, under 8 percent. The 10 to 25 percent 'target returns' Mainvest advertised were this range under different speed assumptions; the multiple sets the ceiling on dollars, and the business's revenue sets the return.

How is a revenue-sharing note different from a fixed-rate bond?

A fixed-rate small business bond, as sold on SMBX, or a fixed-rate note, as on Honeycomb, states a coupon and a term and repays principal and interest on a schedule: an 11 percent 36-month amortizing bond returns about 1.18 times principal, and the return is 11 percent however the business performs, until it defaults. A revenue-sharing note states a multiple and a percentage: the dollar total is fixed at, say, 1.5 times, but the time to receive it and therefore the annual return float with revenue. The bond gives certainty of return and a defined default; the note gives a higher dollar cap, no defined default while the business has any revenue, and a return that only a strong business delivers quickly.

What happens if the business has a bad year, or closes?

In a bad year the quarterly payments shrink with revenue, and the note is not in default merely because they are small; there is no fixed installment to miss. If revenue stops, payments stop, and the investor's claim is an unsecured, usually subordinated, obligation for the unpaid remainder of the multiple, due at the long-stop deadline. If the business closes, recovery is whatever an unsecured subordinated creditor gets, which is often nothing. The structure removes the concept of a missed payment, which sounds investor-friendly and is in fact the reason nobody can say from public data how many of these notes were ever repaid.

Who calculates and collects the revenue share?

The business reports its revenue and the platform computes the share, collects it, splits it across investors and issues tax forms. On Mainvest that was the portal itself, through wallets on the fintech Synapse's rails, and when Synapse failed in April 2024 and Mainvest ceased in June, businesses were told they remained responsible for paying investors directly and no successor servicer was named. A revenue-sharing note is more servicer-dependent than a bond, because there is no schedule an investor can check against a bank statement; someone has to compute the number every quarter.

Is a revenue-sharing note the same as revenue-based financing?

Same economics, different market. Revenue-based financing is the institutional and fintech version: a funder advances capital to a company, usually one with recurring revenue, against a fixed percentage of monthly receipts until a cap of 1.2 to 2 times is repaid, often collected directly from the payment processor. A crowdfunded revenue-sharing note applies the same percentage-until-a-multiple structure to a Main Street business, with retail investors as the funder, quarterly rather than monthly collection, and a portal rather than a processor doing the collecting.

Are revenue-sharing notes secured?

Rarely. The typical Reg CF note is expressly unsecured and subordinated to the business's senior debt, so a bank, SBA or equipment lender is paid first in a failure. Some offerings add a personal guaranty from the owner. Read the Form C: the security description states the percentage, the multiple, the start date, the payment deadline, the ranking and any guaranty, and in some Mainvest offerings the percentage itself rose with the amount raised, so the terms an early investor saw could differ from the final ones.

What did the Mainvest record show about these notes?

Scale and silence. Mainvest hosted 779 offerings from October 2018; 365 were withdrawn before closing, and the 409 with a progress filing reported $33.5 million raised. It published no repayment ledger, advertised for a year a '96 percent on-track' figure with no definition or denominator, and of 379 funded issuers 17 filed an annual report. When the portal ceased on June 14, 2024, the notes survived as obligations of the businesses, but nobody was left computing or collecting the quarterly share. Whether any given note was repaid in full is not knowable from public data, which is the structural weakness of the instrument rather than a fact about Mainvest alone.

Revenue-Sharing Note

Private Credit & Direct Lending

Definition

A revenue-sharing note is a debt-like security in which the issuer, typically a restaurant, bar, brewery or other small business raising under Regulation Crowdfunding, promises investors a stated percentage of its gross revenue, paid quarterly, until each investor has received a set multiple of the amount invested, commonly 1.5 times. There is no interest rate and no fixed installment: the payment in any quarter is whatever the percentage of that quarter's revenue comes to, so a good quarter repays faster and a bad one slower, and the note is fully repaid whenever cumulative payments reach the multiple. Most notes are unsecured and subordinated to bank and other senior debt, begin sharing some months after the offering closes, and carry a long-stop payment deadline, often ten years, at which any unpaid balance becomes due. Because the total to be paid is fixed by the multiple, the investor's annual return depends entirely on how quickly the business's revenue delivers it. The instrument was the standard product of the Mainvest portal, which hosted 779 Reg CF offerings before ceasing operations in June 2024; it contrasts with the fixed-rate, fixed-term, amortizing bonds and notes sold on SMBX and Honeycomb, where the return is the coupon and the schedule is the contract.

Why it matters

The revenue-sharing note is the instrument that made small-business crowdfunding feel fair to both sides: the business pays only when it sells, and the investor gets a bigger dollar cap than a bond would pay. What it trades away is the two things that make debt analysable. There is no rate, so the return cannot be known until the last payment arrives, and the same headline multiple covers a 21 percent outcome and an 8 percent one. And there is no schedule, so there is no such thing as a missed payment, which means there is no default to count, no delinquency to report, and no moment at which a slow note becomes a bad one. On the one portal that specialized in them, that absence of a definable default combined with a portal that published no ledger and an issuer base that filed almost no annual reports, and the result is that the repayment history of 409 funded notes and $33.5 million cannot be reconstructed by anyone. An investor comparing a revenue-share offering with a fixed-rate bond on the same kind of business should price the note's higher multiple against that: a bond tells you what you are owed and when, and tells you the day it stops; the note tells you neither.

Common misconceptions

•The multiple is not the return. 1.5x is a dollar cap; the annual return depends on the speed of repayment and ranges from over 20 percent to under 8 percent on the same note.
•A small quarterly payment is not a default. The note has no fixed installment; it is in default only at the long-stop deadline or on the issuer's insolvency, which is why revenue-share portals report no delinquency.
•'On-track' is not a repayment rate. Mainvest's 96 percent figure had no published definition or denominator and was later replaced by a count of payments processed; neither is a measure of notes repaid.
•The percentage of revenue is not the investor's share of profit. It is a slice of gross sales paid before the business's costs, which makes it easier to compute but heavier for a low-margin business to bear.
•The note is not the portal's obligation. It is the business's; the portal computes and collects, and when Mainvest stopped, the computing and collecting stopped with it.

Technical details

Anatomy of a crowdfunded revenue-sharing note

Revenue share: a stated percentage of gross revenue, commonly in the low-to-high single digits, paid quarterly; some offerings scaled the percentage up with the amount raised so that a larger raise cost the business a larger share.

Payment multiple: the total the investor is entitled to receive, expressed as a multiple of the investment; 1.5x was the Mainvest norm, and 1.2x to 2x the range in revenue-based financing generally.

Start: sharing typically began a set period after the offering deadline, commonly a year, giving the business time to deploy the funds.

Long-stop deadline: a date, often about ten years from issuance, by which the full multiple must be paid regardless of revenue; the only fixed obligation in the note.

Ranking: unsecured and subordinated to senior lenders in the typical offering; occasionally a personal guaranty; no collateral.

Prepayment: the business may usually pay the remaining balance of the multiple at any time, which caps the investor's dollars but shortens the time and raises the annual return.

Reg CF wrapper: a Form C per offering with the note terms in the security description, target and maximum, escrow until the target, the 48-hour cancellation right, and annual reports on Form C-AR that, on the Mainvest record, 17 of 379 funded issuers filed.

The multiple and the return: AltStreet's arithmetic

Assumptions: 1.5x multiple; sharing begins 12 months after the close; payments equal each quarter thereafter; no default. IRR on the investor's cash flows:

Repaid over 2 years of sharing (3 years from close): 21.4 percent a year.

Over 3 years of sharing: 17.1 percent. Over 4 years: 14.3 percent. Over 5 years: 12.3 percent.

Over 7 years: 9.6 percent. Over 9 years, approaching a ten-year long-stop: 7.8 percent.

The same 1.5x with no start delay, repaid over 4 years: 22.6 percent, which shows how much the deferred start costs.

Comparison: an 11 percent 36-month fixed-rate amortizing bond (SMBX's 2025 median was 11.25 percent) returns about 1.18x principal and 11 percent a year regardless of the business's revenue; a 12 percent five-year quarterly amortizing note (Honeycomb's live median) returns about 1.34x and 12 percent a year. The revenue-share note's dollar cap is higher; its return is higher only if repayment is faster than about four years.

None of these is a realized figure. No revenue-share portal has published a ledger of actual payment speeds, so the distribution of real outcomes across these cases is unknown.

Revenue-sharing note versus fixed-rate bond, term by term

Return: note, floats with repayment speed, capped in dollars by the multiple; bond, the coupon, fixed.

Schedule: note, none, quarterly amounts vary with revenue; bond, level monthly or quarterly principal and interest.

Default: note, only at the long-stop deadline or insolvency; bond, any missed payment, with a defined cure process (on SMBX a 30-day halt).

Upside for the investor: note, faster repayment raises the return; bond, none beyond the coupon, and prepayment lowers total interest.

Downside: note, a slow business can hold the investor's money for a decade at a single-digit return without ever defaulting; bond, a default is visible and actionable but the coupon is all there is.

Burden on the business: note, a share of gross sales whether or not there is profit; bond, a fixed installment whether or not there are sales.

Servicer dependence: note, high, since someone must compute the share from reported revenue each quarter; bond, lower, since the schedule is known in advance, though collection still runs through the platform.

Where sold: notes on Mainvest (ceased 2024) and in revenue-based financing; bonds and fixed-rate notes on SMBX (no offerings since April 2026) and Honeycomb (active).

The Mainvest record

Portal: MainVest, Inc., SEC File 007-00162, FINRA CRD 298384, Salem, Massachusetts; 779 Form C offerings from October 2018; ceased operations June 14, 2024, 53 days after its banking intermediary Synapse filed for Chapter 11; registration never withdrawn.

Offerings: 365 of 779 withdrawn before closing (commitments returned under Reg CF, so not losses); 409 with a progress filing reporting $33.5 million raised; 370 with no progress filing at all.

Reporting: 17 of 379 funded issuers filed a Form C-AR; the operator's own November 2022 Form C disclosed a $2.08 million annual loss, cash described as 2.5 months of runway, and a going-concern paragraph.

Marketing: 10 to 25 percent target returns from 2022; a '96 percent on-track repayment rate' shown for about a year and then replaced by a count of repayments processed; a claim of default rates 75 percent below legacy lenders; no ledger, definition or denominator for any of them.

Closure: repayments through the portal accepted until May 22, 2024; businesses told they remained responsible for paying investors directly; no successor servicer named; about $2.4 million in investor-wallet balances became tied up in the Synapse bankruptcy, whose case was dismissed in November 2025 with up to $95 million of customer money unreconciled.

What can and cannot be said: the scale, the withdrawal rate and the reporting gap are on EDGAR; the repayment performance of the notes is not, and AltStreet's Mainvest review states plainly that it is not covered because no source exists.

How to read a revenue-share offering

Find the four numbers in the Form C security description: percentage of revenue, multiple, start date and long-stop deadline; then ask what quarterly revenue would be needed to repay the multiple in four years, and compare it with the revenue the Form C financials show.

Check whether the percentage scales with the raise; if it does, the terms you commit to may not be the terms at close, and a material change triggers the five-business-day reconfirmation.

Read the ranking: unsecured and subordinated means a bank, SBA or equipment lender is paid first, and a personal guaranty is worth what the owner has.

Ask who computes the share and from what: reported revenue, verified how, by whom; on a portal-serviced note the answer is the portal, and the portal's own filings show its runway.

Prefer a platform that publishes a ledger of payments made against the multiple per note; none of the revenue-share portals AltStreet has reviewed did, and SMBX's per-bond payment counter is the nearest thing in retail small-business debt.

Size for the slow case: a 1.5x note that takes eight years is a 9 percent investment locked for eight years with no default to act on; that is the realistic downside on a business that survives but does not thrive.

Frequently asked questions

What is a revenue-sharing note in simple terms?: You lend a business money and, instead of a fixed interest rate, it pays you a slice of its sales every quarter, say 4 percent of revenue, until you have received a set amount back, usually 1.5 times what you put in. If sales are strong you are repaid quickly and earn a high annual return; if sales are weak it takes years and the annual return is low, even though the dollar total is the same. It is a loan whose speed, not its size, floats with the business.
What does a 1.5x payment multiple actually earn per year?: It depends on how fast the 1.5x arrives. On AltStreet's arithmetic for a note that starts sharing a year after the close and then pays evenly each quarter: repaid over two years, about 21 percent a year; over three years, 17 percent; over four, 14 percent; over five, 12 percent; over seven, under 10 percent; over nine, under 8 percent. The 10 to 25 percent 'target returns' Mainvest advertised were this range under different speed assumptions; the multiple sets the ceiling on dollars, and the business's revenue sets the return.
How is a revenue-sharing note different from a fixed-rate bond?: A fixed-rate small business bond, as sold on SMBX, or a fixed-rate note, as on Honeycomb, states a coupon and a term and repays principal and interest on a schedule: an 11 percent 36-month amortizing bond returns about 1.18 times principal, and the return is 11 percent however the business performs, until it defaults. A revenue-sharing note states a multiple and a percentage: the dollar total is fixed at, say, 1.5 times, but the time to receive it and therefore the annual return float with revenue. The bond gives certainty of return and a defined default; the note gives a higher dollar cap, no defined default while the business has any revenue, and a return that only a strong business delivers quickly.
What happens if the business has a bad year, or closes?: In a bad year the quarterly payments shrink with revenue, and the note is not in default merely because they are small; there is no fixed installment to miss. If revenue stops, payments stop, and the investor's claim is an unsecured, usually subordinated, obligation for the unpaid remainder of the multiple, due at the long-stop deadline. If the business closes, recovery is whatever an unsecured subordinated creditor gets, which is often nothing. The structure removes the concept of a missed payment, which sounds investor-friendly and is in fact the reason nobody can say from public data how many of these notes were ever repaid.
Who calculates and collects the revenue share?: The business reports its revenue and the platform computes the share, collects it, splits it across investors and issues tax forms. On Mainvest that was the portal itself, through wallets on the fintech Synapse's rails, and when Synapse failed in April 2024 and Mainvest ceased in June, businesses were told they remained responsible for paying investors directly and no successor servicer was named. A revenue-sharing note is more servicer-dependent than a bond, because there is no schedule an investor can check against a bank statement; someone has to compute the number every quarter.
Is a revenue-sharing note the same as revenue-based financing?: Same economics, different market. Revenue-based financing is the institutional and fintech version: a funder advances capital to a company, usually one with recurring revenue, against a fixed percentage of monthly receipts until a cap of 1.2 to 2 times is repaid, often collected directly from the payment processor. A crowdfunded revenue-sharing note applies the same percentage-until-a-multiple structure to a Main Street business, with retail investors as the funder, quarterly rather than monthly collection, and a portal rather than a processor doing the collecting.
Are revenue-sharing notes secured?: Rarely. The typical Reg CF note is expressly unsecured and subordinated to the business's senior debt, so a bank, SBA or equipment lender is paid first in a failure. Some offerings add a personal guaranty from the owner. Read the Form C: the security description states the percentage, the multiple, the start date, the payment deadline, the ranking and any guaranty, and in some Mainvest offerings the percentage itself rose with the amount raised, so the terms an early investor saw could differ from the final ones.
What did the Mainvest record show about these notes?: Scale and silence. Mainvest hosted 779 offerings from October 2018; 365 were withdrawn before closing, and the 409 with a progress filing reported $33.5 million raised. It published no repayment ledger, advertised for a year a '96 percent on-track' figure with no definition or denominator, and of 379 funded issuers 17 filed an annual report. When the portal ceased on June 14, 2024, the notes survived as obligations of the businesses, but nobody was left computing or collecting the quarterly share. Whether any given note was repaid in full is not knowable from public data, which is the structural weakness of the instrument rather than a fact about Mainvest alone.