What is Revenue-Based Finance?
Revenue-based financing is an alternative funding solution for small or medium enterprises seeking additional capital. A revenue-based finance lender will provide companies with capital for a percentage of their future revenue. Unlike equity financing, where a company has to give up partial ownership (and therefore control) of their company, revenue-based financing ends after the initial capital is repaid, giving business owners more freedom.
There are two kinds of revenue-based finance — a revenue advance or a merchant cash advance. In a revenue advance, lenders receive a percentage of a company’s total monthly turnover. Payments are generally taken monthly, which means high costs and can extend the time it takes to repay the revenue finance.
Repayments are tied to the company’s credit or debit card sales: whenever they process a sale where the customer pays with credit or debit card, a percentage of that sale goes to the lender. You don’t need to worry about not making payments during less profitable months — any sale you make will automatically pay off a portion of the advance.
Do I Qualify?
Qualification for our business cash advances is simple: Contact our customer services team to see if you are eligible.
In business for at least
Monthly credit and debit card turnover of at least
Why You Should Consider Revenue-Based Finance For Your Business
Revenue-based financing is an excellent alternative to traditional financing options, like bank loans or venture capital. Here are a few of the reasons why revenue-based finance could be the best way to fund your business:
- Companies often have to give away equity, personal guarantees, or board seats when working with traditional lenders. This isn’t a concern with revenue-based financing. Businesses can retain ownership of their business and fully control their business plan.
- Revenue-based finance can be secured much faster than other finance options like bank loans, venture capital, or debt financing.
- You don’t need to provide a personal guarantee to benefit from revenue-based financing, significantly reducing your risk.
- Repayment is flexible as it’s based on how much the company makes (thus “revenue-based” finance). Companies with high monthly revenues can repay their loans much faster.
What Can Revenue-Based Finance Be Used For?
Does your business need a traditional loan alternative? Revenue-based financing is a great way to acquire the capital necessary to grow your business. Below, we’ve listed some of the opportunities available to a company that’s received revenue-based finance:
- If your business needs a physical space to operate (like an office or warehousing), revenue-based finance can help you pay the lease or rent for the property. Since 365 Finance offers up to £400,000 with our merchant cash advance, you even have the option of purchasing a property outright for your business.
- For many businesses, specialised and expensive equipment is an unavoidable expense, as it’s essential for continued operation. Revenue-based finance can help your company purchase anything from manufacturing tools to digital solutions.
- Expanding your business is much easier when you utilise revenue -based financing, as the money can help you pay employee wages or fund recruitment to build your team.
Choosing the right business loan for you
With so many finance options available, it’s vital to make sure that you pick the best option available. For instance, certain business models are particularly well-suited to revenue-based financing:
- Business with seasonal performance: Businesses with a clearly defined “peak season” can use revenue-based finance to invest in new stock before the season, then repay the funding using the high revenue from the peak season.
- Businesses using the subscription model: Subscription model businesses have very consistent revenue, which means RBF can be repaid quickly.
- Ecommerce businesses: Because these businesses operate almost entirely online, it’s easy for them to forecast their performance based on data from their business accounting or analytics tools. Revenue-based financing works well with ecommerce companies because if they foresee a low-income period, financing can be quickly and easily acquired to fill the gap.
Revenue-based Finance Repayments
Revenue-based finance payments are based on a company’s revenue, so having a high monthly income can help you pay off your loan faster. However, the specifics of the repayments depend on the type of financing provided.
For revenue advances, a company will make monthly payments based on its total revenue. This total includes income from all sources, including cash payments, invoices, and card or debit payments.
365 Finance offers merchant cash advances, which have different repayment terms. A merchant cash advance only takes payments from credit and debit card transactions. These payments are made automatically — repayment is worked out with the business’ card terminal provider, so you don’t need to worry about paying a lump sum every month.
How a Merchant Cash Advance Works
A merchant cash advance is an ideal type of no credit check loan. Instead of relying on your credit score, we assess your business’ recent debit and credit card transactions to determine affordability and produce a funding offer tailored for your business. Get in touch with our team today to receive a tailored quote. The loan application process is quick and easy, and we can give you a funding decision within 24 hours. There is no need for you to provide collateral or business plans, and we only conduct a soft credit check that does not affect your credit score. From this, we’re able to make a funding decision without running a hard check that will show on your credit report. Unlike a traditional bank loan, there are no interest rates or fixed monthly payments to worry about. Instead, repayments are taken from a small percentage of your future debit and credit card payments. We don’t require any APR as there is no fixed fee, just one all-inclusive cost that’s agreed on at the start, which never changes.
Repayments mirror the ups and downs of your business
A business processing £10,000/month in card sales can receive an unsecured cash loan of the same amount, with no interest rates or fixed terms. Repayments are automatic and based on a small percentage of monthly card sales.
How Rev&U™ repayments work
Agree fixed percentage
Agree a fixed percentage of your credit and debit card sales to repay the business cash advance (typically between 5% and 15% of your card sales)
Make card sales
Sell to your customers on your credit and debit card terminals.
The pre-agreed percentage is automatically deducted from your daily transactions at point of sale and you will.
Get money into your account
This is automated so there is no change to the time it takes for you to receive your money.
Daily sales reduce balance outstanding
The daily amount deducted then reduces the balance outstanding on the business cash advance.
Collections stop automatically
Collections stop automatically once the cash advance has been repaid in full.
Am I eligible for a Rev&U™ cash advance?
Behind thousands of SMEs in the UK
We’ve supported thousands of UK Businesses
How much capital does your business need?
Use our calculator and see how Rev&UTM could help your business.
for every card transaction
84% = £84
goes to your account
16% = £16
goes to 365 finance
A simple and secure way to finance your business
Apply in minutes
Complete the application form. It takes less than 5 minutes!
Be allocated a relationship manager to assist with any queries.
Approval under 24h
A decision will be made under 24h.
Get your cash advance in days
Funding directly into your business bank account within days
Same Day Business Cash Advance
The flexible alternative to bank loans