Published By Janet Gershen-Siegel at June 18th, 2021
It is very easy to have a business with unpredictable income – especially when you have a startup venture. But business revenue financing can help you to smooth out the gaps in your cash flow.
This is the case for most businesses – you’re not alone. Unless you sell on a subscription basis, sales will go up and down. But in the meantime, you still have to pay for rent and equipment. And you absolutely must make payroll.
It’s also called royalty-based financing. This is a way to raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues, in exchange for money invested. In a revenue-based financing investment, investors get a regular share of business income until a predetermined amount is paid. Often, this predetermined amount is a multiple of the principal investment. It is usually between three to five times the original amount invested.
The business must make regular payments to pay down an investor’s principal. But this method of financing is different from debt financing. For one thing, interest is not paid on an outstanding balance. And there are no fixed payments. Payments to investors directly relate to how well a particular business is doing. If sales dry up, the investor gets a lower royalty payment.
It’s also different from equity financing. The investor does not have direct ownership in the business. Hence revenue-based financing is often felt to be a hybrid, between debt financing and equity financing.
In some ways, business revenue financing is like account receivable financing. With AR financing, a company uses receivables (outstanding invoices or money owed by customers) to get financing. The company gets an amount equal to a reduced value of the receivables pledged. The age of the receivables affects the amount of financing the company gets. See investopedia.com/terms/r/revenuebased-financing.asp.
Because repayment of the loan is based on revenues, the time it takes to repay the loan will fluctuate. The faster revenue grows, the quicker you’ll repay the loan, and vice versa.
The percentage of monthly revenues committed to repayment can be as high as 10%. Monthly payments will fluctuate with revenue highs and lows and will continue until you’ve paid back the loan in full.
The duration of the loan ultimately depends on the success of the business. The faster the business grows, the faster the loan is repaid. The RBF provider sees better returns the faster you pay the loan in full. This is one reason the underwriting process focuses not only on your current revenues, but also on your business’ potential to quickly increase revenues.
Providers will expect you to have a plan to increase your existing business revenue tenfold, as part of the application process. Since the loan is based on your current revenue stream, lenders will want to see potential growth opportunity for your business.
Investors’ expectation is that the funds that they lend you will be used to start and support planned growth. This is like what venture capitalists would ask for through a fundraising process. See fitsmallbusiness.com/revenue-based-financing.
Business revenue financing is perfect for entrepreneurs looking for fast, easy money with little headaches. You can easily get approval for financing as much as $500,000, within 72 hours, based on a simple review of business bank statements.
This program works to help clients get funding, based strictly on cash flow as verifiable per business banks statements. Lenders will not ask for financials, business plans, resumes, or any of the other burdensome document requests that most conventional lenders demand. You can get approval even with bad credit.
One class of businesses which find RBF appealing are those too small to attract venture capital. This also includes businesses which would not normally attract VCs, like mom and pop businesses. VCs are more interested in industry-disrupting businesses.
Businesses can still have solid revenue streams, even if VCs don’t take an interest. Such solid revenue streams can grow and be sustainable for a long time. BRF can be a good fit for companies that fit this mold, because revenue-based lenders make loans based on growth potential. They are not looking for the huge returns that venture capitalists demand.
BRF is great for companies where the ownership wants to retain control. Some businesses will be growing quickly enough to attract the attention of venture capitalists. But the ownership might not like the idea of diluting their equity or giving some degree of control to a venture capitalist. With RBF, you get a loan to repay to the lender. It does not require release of an equity stake in your business, as you would have with funding from a VC.
Credit Suite works directly with lenders. We work with hundreds of investors and lenders, through several different funding programs. These lenders all offer their own different and unique lending requirements. It can be tough to navigate these alone and know all your options. This is where we help. For more information, go to creditsuite.com/business-loans.
This program is one of the easiest, most hassle-free ways you can get business funding. To determine approval, lender will often review 4 – 6 months of bank statements. All the lenders are looking for is consistent deposits. They want to see deposits showing your revenue is $120,000 or more, with $150,000 required for unsecured.
Lenders will also verify that you have been in business one year or more. Lenders are also looking to see that you don’t have a lot of Non-Sufficient Funds (NSFs) showing on your bank statements. They also want to see more than 8 deposits in a month going into your bank account. In essence, all they are looking for is that you manage your bank account responsibly and have a decent number of consistent deposits. If you meet these simple criteria, you can get approval!
Our revenue financing program is perfect for business owners with credit issues. Lenders are not looking for, nor do they require, good credit to qualify.
You can even get approval with severely challenged personal credit and poor credit scores. You can get approval regardless of personal credit quality, even if you have severe recent derogatory items and collections on your credit report. This is one of the best and easiest business financing programs that you can qualify for, even if you have personal credit problems.
You can get pre-approval for our revenue financing program, within 24 hours. Also, you can get a formal approval, within 72 hours from submitting your application.
Get your money in your bank account, within 7 days or less from applying. Our clients love this program partly due to how easy it is to apply and get approval, and how FAST you get your funds!
You can get money consistently from our Business Revenue Financing Program. Over 80% of our clients come back for even more financing after their initial approvals. Typically within 3 – 6 months of approval, you will get an opportunity to get even more money than you got before. And all you will need for approval for additional funding is a quick review of your last 2 months bank statements.
You can get your money in your bank account within 24 hours or less. Our revenue financing program helps you rapidly grow and scale your business. You will have ongoing access to receive more and more funding easily, and very quickly, just when you need it!
Get 24-hour pre-approval. Application to funding in 7 days or less. Get approval for additional future funding. Easy bank statement review for approval.
Pay no application fees. Also, get approval with bad credit. There are no collateral requirements. 3 to 36 month financing terms. Get approval for up to 12% of annual revenue.
Business revenue financing is a means of getting a loan. Investors lend based on your business’s potential to grow and earn. Your business pays the loan back with royalty payments. Royalty payments go up and down based on business revenue. If your business makes less, then you pay back less. BRF investors often get three to five times what they put in.
Business revenue financing works well for businesses too small or conventional to attract VC interest. It’s also good for businesses where there is VC interest, but the ownership wants to retain control. It’s also good for entrepreneurs with poor personal credit. All they need to do is show revenues. Credit Suite offers a business revenue financing program. We help you navigate the complexities of several lenders with varying requirements. Let’s take the next step together.