Revenue-Based Financing (RBF)

Revenue-Based Financing

Revenue-based funding, or RBF, is a relatively new financing structure that offers entrepreneurs a flexible method of attaining growth capital without sacrificing equity. Millennial's program is designed to help entrepreneurs take their businesses to the next level when banks or private equity are not an option. As the company generates revenue, a percentage of the gross revenue partition rate (GRPR) (usually between 5-10%) is paid to the lender.

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

RBF

Here's How It Works

Say a promising entrepreneur needs capital to grow, but cannot get it from traditional sources. Millennial Capital Management loans them $50,000 without an equity requirement. From there, the parties enter into an RBF agreement outlining the details of how the loan will be repaid. The company uses the additional capital to implement its growth strategy and increases revenue. Each month, the company provides a gross revenue report to us and delivers the agreed upon GRPR until the loan is paid off or the cap is reached.

Take a look at this comparison chart to really see the difference between RBF and traditional options.

Revenue Based FinancingBank FinancingPrivate Equity, Angel Investors and VC
Personal Guarantees No Yes Possibly
Payment adjusts with monthly revenue Yes No No - N/A
Owner Dilution of Equity No No Yes
Valuation Required No Possibly Yes
Time to Fund 15-45 days 45-90 days 3-9 months
Cost of Capital 2% - 4% 2% - 3% $15,000 - $50,000
Exit agreement early Yes with payoff Yes with payoff No
Equity Pledge as guarantee Yes Yes Yes