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Revenue-Based Funding

Finding the Right Funding for You - Revenue-Based Financing

Business financing can come in many forms, from traditional loans to business lines of credit and everything in between. For some businesses, revenue-based financing is an appealing alternative to more restrictive traditional loans or high stakes equity-based agreements. But how can you determine if this is the right financing structure for you and your business? Let’s first dive into how revenue-based financing works.

What is Revenue-Based Financing?

When many think of business financing, their mind immediately jumps to conventional loans structured so that borrowers pay in incremental installments with a set interest rate over an established period. Traditional loans also take weeks if not months to secure, including onerous requirements and in many cases providing collateral to the lender. This structure is a good fit for many businesses, but there are scenarios where revenue-based financing will serve you more effectively.

As the name suggests, revenue-based financing is funding that a business agrees to pay back over time using its future revenues. Businesses receive the funding amount upfront, then pay a percentage of their monthly revenue back to the financier. Remittance frequency options and overall repayment terms vary by financier and can be flexibly customized to suit the needs of individual businesses.

Benefits of Revenue-Based Financing

Compared to conventional bank loans or equity agreements that lock owners into restrictive debt terms and dilute ownership, revenue-based financing offers several attractive benefits to growing businesses.

Greater Speed – Revenue-based financiers will typically move very quickly, often able to provide customers access to capital in just a few days or even faster.

Maintain Control of Your Business – With revenue-based financing, you do not have to trade equity for funding, meaning you can acquire the capital you need to grow without equity dilution.

Is Revenue-Based Financing Right for My Business?

Revenue-based financing is the perfect option if you don’t want to dilute equity or spend time raising capital to invest in initiatives that are likely to drive revenue for your business. As such, revenue-based financing best serves businesses in growth situations where revenue is expected to increase soon, such as:

  • Companies on the cusp of rolling out a new product
  • Businesses seeking capital to invest in new equipment or expansion
  • Growth-stage companies seeking to expand their staff
  • Businesses about to launch a large-scale marketing campaign
  • Growing businesses that don’t want to risk dilution to empower further growth

Find the Right Funding with Libertas

Don’t settle for funding that just fits your budget. Get the funding that fits you. At Libertas, we value a thorough understanding of your needs, leveraging a complete understanding of your business to create funding solutions customized to fit your unique circumstances. Get in touch with a Libertas financing advisor today and discover the difference that personalized funding can make in realizing your business goals.