Cash flow/revenue-based lending?

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February 26, 2024

by a searcher from University of Virginia in Oakland, CA, USA

Does anyone have experience using a cash flow/bridge loan with "revenue based terms" to close a purchase transaction?

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Reply by a professional
from Villanova University in West Chester, PA, USA
Hi ^redacted‌, yes, we’ve assisted a number of clients with this where it's a private lender providing a revenue based loan. There are a number of ways to accomplish this and structure the loan. One of the ways is to have a fixed interest rate and fixed amount of principle and interest to be repaid from a percentage of revenue and there is no maturity date for the repayment. In that instance, the payments fluctuate based on revenue until they’re paid in full . But there is no set way that it needs to be done. I'd be happy to discuss further. Feel free to schedule a complimentary consultation through the link in my bio.
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Reply by a searcher
in Houston, TX, USA
Having had experience with RBF (for additional working capital), I can say that Revenue based financing will only be beneficial if it’s extremely necessary and your business model supports it.

It should be seen as a one of the last options and should only be considered if you have a recurring revenue business model otherwise, you could risk a default.
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