What Is Revenue Based Finance?

Learn how you can use revenue based finance to grow your business.

When running a business, having access to financing is a critical component of success. Whether you are just starting out or looking to expand, having the capital to invest in your company's growth can make all the difference. However, traditional funding options like venture capital or bank loans are not always the best fit for every company, especially those with a predictable revenue stream. This is where revenue based finance comes in.

Revenue based business loans are an option that has grown in popularity in recent years. Rather than taking on debt or giving up equity in the company, revenue based finance provides funding for businesses based on a percentage of the company's monthly revenue. This means that companies with a consistent revenue stream can access financing without sacrificing ownership or control.

This type of funding provides real flexibility for business owners. By exploring this financing option, you may be able to access the capital you need to grow your business and take it to the next level. So, let's dive in and explore what it is and how it can be used by your business.

What is revenue based finance?

Revenue based financing, also known as RBF, is a type of financing where a company can access capital based on a percentage of their monthly revenue. Unlike traditional financing options, such as bank loans or venture capital, revenue based loans do not require the company to give up equity or take on additional debt. This means that the company can retain ownership and control over their business while still accessing the capital they need to grow and expand at a pace which their market(s) demand.

Traditional funding options like bank loans and venture capital typically require a significant amount of collateral or look for a high level of growth potential to secure funding. This can be a challenge for some companies, especially for startups and small businesses. Additionally, RBF loans can be a good option for companies that may not have a long enough credit history or a strong enough balance sheet to qualify for traditional forms of financing.

Accessing revenue based lending is relatively easy in comparison to other financing routes. All you have to do is apply online, or for more information message us on live chat and one of the team will guide you through the process.

Typically, you will need to provide information outlining your monthly revenue by connecting your existing banking or payment system accounts. Based on this information, your capital provider will be able to generate an offer that represents a percentage of your monthly revenue – this usually ranges from 3-12%, depending on your chosen capital provider.

Once the financing is approved, the capital provider will receive a percentage of the company's monthly revenue until the financing is repaid in full. The repayment terms are typically structured to be flexible and can be customised to meet the needs of the company. This can include longer repayment periods or a percentage-based repayment plan that is tied to revenue growth.

For example, at Outfund, all you need to do is securely connect your existing banking and payments systems for our team to analyse your revenue data in realtime. Once this is done you will receive a tailored offer ranging from £25K to £10M within 24 hours. Then it is up to you to choose the offer that best suits your business needs. When it comes to repayments, this can be done via a flexible revenue share as your daily sales come in. That way, if revenues slow, so do your repayments. Or if you prefer predictable repayments, you can choose to have a fixed repayments option as well.

Revenue based funding is often used to fund specific growth initiatives like marketing or to bridge financing gaps between funding rounds. It can also be used to finance the purchase of equipment or to cover other capital expenditures, like software or payroll subscriptions.


Who is a good candidate for revenue based finance?

While revenue based funding is a great option for a wide range of companies, including both young and established businesses, it is a particularly good option for companies with a strong recurring revenue stream, such as Software as a Service (SaaS) companies, e-commerce businesses and other subscription-based models.

How can revenue based finance be used?

If you’re weighing up whether or not your business could benefit from revenue based loans, here are a number of ways it can be used:

Growth capital: An RBF loan can be used to fund your growth initiatives, such as expanding product lines, entering new markets, or increasing marketing and sales efforts.

Working capital: You can also use this type of funding to cover short-term cash flow needs, such as paying suppliers or covering payroll.

Bridge financing: RBF can also serve as a bridge between funding rounds, providing your company with the capital it needs to continue operating until it can secure more traditional financing.

It’s also worth noting that on top of offering finance itself, a lot of revenue based financing lenders can bring strategic value to the table, such as industry expertise or access to networks and resources, which can be valuable for a growing company. At Outfund, we can connect you with growth partners, specialist agencies and VCs so you can hit your long-term milestones.

Supercharge your growth with revenue based finance

So through flexibility, fast access to capital and tailored repayment terms, revenue based financing is quickly becoming the preferred option for fuelling business growth today.

While revenue based financing may not be suitable for all companies, those with a predictable revenue stream and a clear path to revenue growth should consider it as a viable financing option. By leveraging revenue based financing, these companies can access the capital they need to fuel their growth quickly without sacrificing ownership or control.

As with any financing option, it is important for companies to carefully evaluate the pros and cons of revenue based loans before making a decision, of course. While it can provide fast access to capital and tailored repayment terms, it can also be more expensive than traditional loans, depending on your provider.

Additionally, companies should ensure that they have a clear understanding of the repayment terms and the impact that they will have on their cash flow. It is important to work with a capital provider that is experienced in revenue based financing and that can provide guidance on how to structure the financing in a way that is beneficial for your company, like Outfund.

To learn more about how revenue based funding can help you grow your business, apply online in 5 minutes and receive your offers in 24 hours.