Revenue Based Financing Uk

Below we highlight the pros and cons with respect to other traditional startup financing options.

Revenue based financing uk. The essence of it as the name suggests is providing financing to a business in exchange for a share of its future revenues. Investors began applying it to early stage companies in the 1980s. In exchange for funding as your business generates future revenue a percentage of cash receipts usually between 3 8 are remitted monthly. Uncapped a london headquartered and warsaw based startup that wants to provide revenue based finance to growing european businesses is officially launching today and disclosing that it has.

Revenue based financing rbf is non dilutive funding based on your business s recurring revenue. Revenue based financing also referred to as royalty based financing is different than a fixed loan. Revenue based financing rbf is lesser known but highly innovative third way between traditional debt and equity financing. Investors inject growth capital in exchange for a percentage of monthly revenues.

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. As a good fit for growing startups it allows startup founders to maintain more ownership and control of their business than they would under equity financing. A lender will look at a company s total revenue picture and lend against both the total revenue that s brought into the company but will also use cash flow analysis when determining funding. In short revenue based loans are financing facilities based not only on the company s past revenue performance but also projecting forward revenue.

Rather than paying back a fixed amount each month businesses share an agreed percentage of their daily or monthly sales with a lender until the advance including interest is paid off in full. Revenue based financing also known as revenue sharing or royalty based financing is a method of raising capital for emerging and high growth businesses. A company may successfully raise the required capital without sacrificing part of its equity or pledging a part of its assets as collateral collateral collateral is an asset or property that an individual or entity offers to a lender as security for a loan. Revenue based financing is an attractive method of raising capital for companies.