Revenue-based funding, or RBF, is a relatively new financing structure that offers a flexible method of attaining growth capital without sacrificing equity.
Our program is designed to help you take your businesses to the next level when banks or private equity are not an option. As your company generates revenue, a percentage of the gross revenue generated (GRG) (usually between 5-10%) is paid to the lender. This allows your monthly payment to scale up or down depending on your revenue.
Assume your sales or GRG are $100,000 for the month, and the Gross Revenue Participation Rate (GRPR) is 5%. You would have a monthly payment of $5,000. There is no traditional interest rate and the payment slides up or down depending on the revenue generated.
Typically, we look to fund:
- Companies with high gross margin products or services
- Companies with detailed growth plans
- Companies where a significant impact to growth can be made with $50,000 to $500,000
- Capital-efficient, high-margin businesses
- Niche opportunities
Take a look at this comparison chart to really see the difference between RBF and traditional options.
|Revenue Based Financing||Bank Financing||Private Equity, Angel Investors and VC|
|Payment adjusts with monthly revenue||Yes||No||No - N/A|
|Owner Dilution of Equity||No||No||Yes|
|Time to Fund||15-45 days||45-90 days||3-9 months|
|Cost of Capital||5% - 10%*||5% - 7%||$15,000 - $50,000|
|Exit agreement early||Yes with payoff||Yes with payoff||No|
|Equity Pledge as guarantee||Yes||Yes||Yes|