{"id":7870,"date":"2021-06-03T10:27:18","date_gmt":"2021-06-03T10:27:18","guid":{"rendered":"https:\/\/www.kredx.com\/blog\/?p=7870"},"modified":"2023-10-26T05:51:28","modified_gmt":"2023-10-26T05:51:28","slug":"revenue-based-financing","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/revenue-based-financing\/","title":{"rendered":"Revenue-Based Financing"},"content":{"rendered":"

Did you know <\/span><\/i>revenue-based financing<\/i><\/b> is a popular method of fundraising in the United States?<\/span><\/i><\/p>\n

The convenience of accessing capital and the simpler repayment terms has helped its popularity spread like wildfire. Accordingly, many countries, including India, were quick to adopt it as an alternative to traditional forms of financing.\u00a0<\/span><\/p>\n

However, revenue financing is still a nascent concept in India, and many MSMEs are still unaware of its perks and offerings. If you came across this concept recently and wondered how it could help your business grow, make sure to find out how it works and its associated features.\u00a0<\/span><\/p>\n

On that note, let us uncover <\/span><\/i>revenue-based financing<\/i><\/b>\u00a0in brief.<\/span><\/i><\/p>\n

A Brief Introduction To Revenue-Based Financing<\/b><\/h2>\n

Revenue-based financing<\/b><\/a> is also known as royal-based financing. This financing option is directed towards D2D and SAAS businesses and crafted to help them resolve their capital issues.<\/span><\/p>\n

Recently, it has emerged as one of the most convenient ways of raising capital funds. As an entrepreneur, you can access funds under this arrangement by simply leveraging your projected annual or monthly revenue.<\/span><\/p>\n

Though the concept of revenue-based manifests traits of both debt and equity-based financing, it is an alternative form of funding. Instead of paying interest or compensating in the form of company ownership, you can repay the borrowed sum from the portion of your business income.\u00a0<\/span><\/p>\n

Know How Revenue Financing Works<\/b><\/h3>\n

You already know that revenue-based funding is a method of accessing cash in exchange for a part of projected annual or monthly revenue.\u00a0<\/span><\/p>\n

This setup works when a business approaches a fintech company to avail its <\/span>revenue-based financing<\/b> solution. Take a quick look at these pointers and an example to gain an insight into how the entire process works.\u00a0<\/span><\/p>\n

Suppose an MSME owner requires cash to boost his business capital. He approaches a financial institution to avail revenue financing. Subsequently, the financier follows a couple of steps before offering the required funds.<\/span><\/p>\n