Revenue Based Financing Example

Revenue based financing is the best of both worlds where founders get large funding amounts while retaining ownership.

Revenue based financing example. Your company will be required to make monthly installment payments equal to 2 5 of your overall revenue. Your company arranges a deal with abc capital which specializes in revenue based financing. Cons of revenue based financing more expensive than bank loans. Thankfully there are many revenue based financing companies out there that are willing to help other businesses.

To best explain the process of rbf funding let s use an example. Corl can fund up to 10x your monthly revenue to a maximum of 1 000 000. A consistent high monthly recurring revenue mrr along with high gross margins combine to qualify a business for a royalty based loan. 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.

Credit based financing is an other option for those who may not be. Revenue based financing is usually considered. Revenue based financing is a lesser known product but it is a very innovative third option that lands between conventional debt financing and equity financing. Revenue based financing is perfect for saas businesses and other companies whose primary income is based on subscriptions.

The deal states that abc capital will provide the required 1 million in exchange for a portion of your revenues. Pied piper inc needs funding to accelerate customer acquisition for its saas solution. Gsd capital loans 250 000 to pied piper taking no ownership or control of the business. A portion of revenues will be paid to investors at a pre established percentage until a certain multiple of the original investment has been repaid.