A great way for businesses to access money is through revenue-based financing. It's also sometimes referred to as revenue participation or revenue sharing funding.
Revenue financing is a loan to a company which is paid back through a royalty on the revenues. Typically this royalty is in the 2 to 5% range.
With revenue based capital, instead of selling ownership in your company you sell rights to a percentage of your company's revenue for some period of time.
Funding is commonly available up to 12% of a company's annual revenue, and loan amounts are available as high as $500,000. So you can get up to $500,000 with this program just because you have consistent revenue.
To qualify a company must have current revenue, over $10,000 monthly.
When you borrow money from a bank, they commit to repayment and commit to a specific rate of repayment.
One of the benefits of revenue funding is that it provides a variable payment.
If revenue goes down, your payment also goes down equivalent. This is extremely helpful in seasonal industries.
Another difference compared to a bank: lenders want a personal guarantee and collateral. If you default you may lose that collateral.
Revenue based financing typically has no collateral requirement. There are also no personal guarantee requirements for the founder unlike bank loans.
This funding can be used for many purposes including growth capital. And there are no restrictive covenants like bank loans.
Revenue Financing is one of many core funding products available for you through your Business Finance Suite.
Contact us today to learn more.
Trevana Properties is a placement company working with a variety of hedge funds, REIT's, commercial banks, specialty boutique lenders, private investors and other funding sources not widely known to the general public.