Revenue Based Financing Calculator

Investors began applying it to early stage companies in the 1980s.

Revenue based financing calculator. Revenue based financing is an alternative growth investment structure with different mechanics provisions and return profiles than either equity capital or traditional lending products. Once the payments have totaled the funding amount plus an agreed upon multiple cap the repayment obligation has. This margin calculator will be your best friend if you want to find out an item s revenue assuming you know its cost and your desired profit margin percentage that s not all though you can calculate any of the main variables in the sales process cost of goods sold how much you paid for the stuff that you sell profit margin revenue how much you sell it for and profit from any of the. In exchange for funding as your business generates future revenue a percentage of cash receipts usually between 3 8 are remitted monthly.

Generally within 3 5 years. Revenue based financing sometimes known as royalty based financing was used by oil investors in the early 20th century to finance oil and natural gas exploration and later by the pharmaceutical industry hollywood and energy companies. After an initial grace period monthly payments continue until the initial capital amount a multiple or return cap is repaid. Compared to the benchmark a similar scenario for revenue based financing would result in a lower portfolio return of 1 70x.

Revenue based financing or royalty based financing rbf is a loan in which repayments are based on a percentage of the borrower s future monthly revenue rather than a fixed amount. Revenue based financing is a form of investing that follows the averages home runs philosophy as the capped returns angle puts a ceiling on the returns an investment manager can expect to make. Revenue based financing could be a good alternative to venture capital for tech startups that aren t able to qualify for equity funding or don t want to give up ownership of their company. It could also be useful to other small businesses that need money for growth but can t get a term loan or line of credit.

Revenue based financing also referred to as royalty based financing is different than a fixed loan. Revenue based financing or royalty based financing rbf is a type of funding or financing provided to an emerging or growing small enterprise in which an investor pumps capital into the businesses in return for a small percentage of ongoing gross revenue royalty every month the best thing is that the returns to the investor only continues until the initial capital amount a multiple is repaid. It is first and foremost a debt instrument that is paid back by sharing in a company s revenue. Revenue based financing rbf is a type of financial capital provided to growing businesses in which investors inject funds in return for a of ongoing gross revenues.

What is revenue based financing.