What is Revenue Based Financing? (RBF)
Revenue Based Financing (RBF) is an innovative new source of growth capital. As a result, emerging companies can expand their business and increase the value of their company. With RBF, you don't sacrificing equity, or take on cumbersome debt. Above all, cash flow friendly flexible monthly payments rise and fall with revenue.
Unlike traditional debt, there are no restrictive covenants, hard collateral or personal guarantees. Additionally, no equity position is taken. Therefore you retain ownership and control of your company. The CEO' Guide to Types of Growth Capital
How Does Revenue Based Financing Work?
- Growth capital is provided up-front in exchange for a percentage of a company’s monthly top-line revenue
- Revenue base financing loans range from $1M to $3.5M
- The revenue based rate is typically fixed at 1-5% of the top-line revenue
- Flexible monthly payments rise and fall with revenue
- Revenue based financing payments are structured to last for about 4 to 6 years
- Flexible payments continue until the capital plus a predetermined amount is repaid.
Benefits of Revenue Based Financing:
- Retain 100% ownership and control
- Structured to be cash flow friendly
- No restrictive financial covenants
- No personal guarantees
- Business friendly funding
- No collateral
- No default provisions
How Much Growth Capital Can We Get?
- Typically between $1M and $3.5M
What are the Qualifying Criteria?
- Approximately $3M - $50M annual revenue
- Market-proven product or service
- In business for 3 plus years
- Substantial growth opportunities - expand sales presence, acquisition, new product launch, etc.
- Gross margin in excess of 30%
- Sales forecast with detailed sales process and plan in place
- Proven management team that values their equity