Tag: Revenue based loans

Revenue based loans are a form of debt where repayments rise and fall with your top line. Lenders advance capital and take a fixed percentage of your gross revenue until a multiple of the advance is repaid. This means your repayments align with seasonality and slow months, meaning cash flow pressure can be lower than with fixed monthly debt. A concrete comparison helps. Traditional bank loans usually require monthly fixed payments and collateral. Venture capital takes equity and control. Revenue based loans typically do neither of those in equal measure, meaning that you keep ownership while accepting variable repayment flows. For example, a lender might take 6 percent of monthly revenue until they recover 1.4 times the principal, meaning the total cost and payment path are both determi...