Is Revenue Based Finance Right Choice For You?

 

A lot of my clients have been having queries about the meaning of RBF better known as Revenue Based Finance and if they will be able to obtain the said finance. They said that money is just money after all, regardless of the label that is attached to it. However, this may not be entirely true. The reason for this is because not all types of loans are considered beneficial for your business. This is comparable when a doctor will prescribe drugs for a specific kind of illness, lenders will also match their funds to the cause of the borrowers. This is because it is essential for funding to be utilized in the most particular way for the purposes that it is intended and that is to allow the borrower to attain his objectives.

 

Dealstruck Revenue Based Finance is commonly known as an investment, a type of financing structure that aim to finance future subscription revenues in exchange for a percentage of gross revenues that are ongoing until such investment will be repaid by the investor. Fast-growing companies make use of this type of financing because it generates high monthly recurring revenues from different companies. There is a tendency for these companies to be denied in the application of traditional bank loans because of their lack of assets that will be used as collateral to their loans. Early stage companies would be best to use this type of financing since they will be offered high revenue growth considering their need for additional funding to achieve financial growth.

 

Similar to royalty payments, the monthly flexible loans payments will be based on a percentage share that will be taken out from the client's monthly gross revenue. In case of these revenues drop, the payments will drop as well, and vice versa. The funding will be considered mature if it will already be tied to the time that a predefined total repayment cap will be reached, which usually happens in the span of 6 to 60 months depending on the needs of the client.

 

There are some investors of Revenue-Based Finance who are able to offer a modified short term financing up to 3 to 12 months together with a fixed monthly payment as well as a fixed maturity. What the client needs the most in order to obtain this is the generation of monthly recurring revenue which is also known as the MRR, low revenue/customer churn cost and rate when they will be acquiring a customer, high gross margin, and a lot more. To read more about the benefits of loans, visit http://www.ehow.com/about_4794249_types-commercial-loans.html.