BlackStone Funding LLC

Revenue Based Financing

Revenue Based Financing (RBF)

What is Revenue Based Financing?

Revenue-based financing (RBF) is a financing model where a business receives funding in exchange for a percentage of its future revenue. It is an alternative form of financing that is different from traditional loans or equity investments.

In revenue-based financing, the lender or investor provides upfront capital to the business, and in return, the business agrees to share a portion of its future revenue with the lender until a predetermined total repayment amount is reached. The repayment is typically based on a fixed percentage of the business’s revenue, known as the revenue share percentage, and continues until the agreed-upon repayment amount is met.

The key characteristics of revenue-based financing include:

1.Repayment based on revenue: Unlike traditional loans with fixed monthly payments, the repayments in RBF fluctuate based on the business’s revenue. If the business has higher revenue, the repayment amount will be higher, and if revenue decreases, the repayment amount will decrease as well.

2.No fixed maturity date: Instead of having a specific loan term, the repayment period in RBF is based on the achievement of a predetermined repayment amount. Once the total repayment amount is reached, the obligation to make revenue share payments typically ends.

3.No equity dilution: Unlike equity investments, RBF does not involve selling ownership stakes in the business. The business retains full ownership and control.

4.Alignment of interests: Revenue-based financing aligns the interests of the lender and the business, as the lender’s return is directly tied to the success of the business. If the business performs well, the lender receives higher repayment amounts, and if the business struggles, the lender’s repayment is reduced.

Revenue-based financing can be attractive for businesses that have consistent revenue but may not qualify for traditional bank loans or prefer to avoid giving up equity. It can be used for various purposes, such as expanding operations, investing in marketing, hiring employees, or developing new products.

It’s important for businesses considering revenue-based financing to carefully review the terms, including the revenue share percentage and any other fees or provisions associated with the agreement. As with any financing option, it’s advisable to consult with a financial advisor or attorney to ensure it aligns with the business’s financial goals and requirements.

FAQs

Revenue-Based Financing (RBF) is a financing model where a business receives funding in exchange for a percentage of its future revenue. It differs from traditional loans or equity investments.

In RBF, a lender or investor provides upfront capital to the business, and the business agrees to share a portion of its future revenue until a predetermined total repayment amount is reached. Repayments are based on a fixed percentage of the business’s revenue.

Key characteristics include repayment based on revenue, no fixed maturity date, no equity dilution, and alignment of interests between the lender and the business.

Repayment fluctuates based on the business’s revenue. Higher revenue results in higher repayment amounts, while lower revenue leads to reduced repayment amounts.

RBF can be attractive for businesses with consistent revenue that may not qualify for traditional bank loans or prefer to avoid giving up equity. It offers flexibility and aligns the interests of the lender and the business.

RBF can be used for various purposes such as expanding operations, investing in marketing, hiring employees, or developing new products.

Businesses should carefully review the terms, including the revenue share percentage and any associated fees or provisions. Consulting with a financial advisor or attorney is advisable to ensure alignment with financial goals and requirements.

Business Line of Credit

LOAN AMOUNT

$5,000 - $500,000

TIME TO FUND

$24 Hours

Terms

3 - 12 Months

INTEREST RATE

Starting at 1.29% a month

Partner Benefits:

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