Revenue-based Financing 101
Revenue-based financing is a tool to get working capital for your company, with more flexibility than a bank loan, and without any loss of equity. For these reasons, revenue-based financing can be a great way for a business to obtain funds and control its cash flow. With revenue-based funding, you receive funds, and an agreed-upon amount is paid back by taking a set percentage of business revenue over a flexible period of time. This does not require the same strict credit requirements as a traditional bank loan, nor do you lose any ownership control over your company.
Revenue-based Financing Allows You to Maintain Control of Your Cash Flow
With this financing, you maintain complete control of your company and cash flow. Monthly payments tend to be more flexible since payments are based on your business’ revenue. Before approval of this funding, you must provide proof of your monthly revenue for at least the past 3 months and this will help determine how much funding you qualify for. Furthermore, with revenue-based financing, there is no loss of equity. You do not give up control of your business or sell any equity meaning you remain in control of everything. Your business is able to grow under your watch and have cash available to you faster than a traditional bank loan.
Consistent working capital year-round
Whether you need to cover startup costs or expansion costs, it is extremely important for you to have working capital available. Revenue-based financing is a great option for your business to get capital without incurring interest. Many lenders make decisions right away and funding will be provided for you in less than a month. This is great for maintaining a cash flow and keeping all of your financials in order. With revenue-based financing you have payment caps ranging from 1.35 to 3.0. If your company grows at a faster rate than you anticipated, you can pay the loan off in a shorter period of time.