What is revenue-based finance?
Revenue-based finance is a unique form of financing that can align with your business’s revenue streams. Rather than traditional loan repayments based on fixed amounts, revenue-based finance allows you to repay a percentage of your future revenues until the agreed-upon amount is reached.
A broker specialising in revenue-based finance assesses your business’s revenue generation potential and growth projections. They connect you with lenders who offer this flexible financing option.
Instead of fixed monthly repayments, a percentage of your future revenues is allocated towards repayment. This approach ensures that your repayment obligations are directly linked to your business’s performance. During periods of lower revenue, repayments adjust accordingly, easing the financial burden on your business.
Revenue-based finance is especially useful for small and medium-sized businesses (SMEs) with fluctuating revenue streams, such as seasonal businesses or those experiencing rapid growth. It can be utilised for various purposes, including working capital, expansion plans, marketing initiatives, or equipment purchases.
For example, a software-as-a-service (SaaS) company may secure revenue-based finance to fund its marketing campaigns and sales team expansion. As the business grows and generates more revenue, a percentage of that revenue is used to repay the finance, allowing the company to scale without straining its cash flow.
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