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What is a Revenue-Based Loan?

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What is a Revenue-Based Loan?

Revenue-Based Loans give businesses capital in exchange for a percentage of their future revenue.

The loan would be approved on the agreement that companies will repay a percentage of their revenue every month. For example, if a company takes out a £250,000 loan, then they might agree to pay back 6% of their revenue each month.

Businesses that receive a high income each month will result in a larger monthly repayment and a shorter repayment term overall, while businesses that receive a lower monthly income will be paying a smaller monthly repayment which will then result in a longer repayment term overall.

Revenue-Based Loan lenders will work with you to learn about your business’s work history so that they can establish how much they are willing to lend you. This process is simple for the business, as a lender can provide you with a “yes or no” within days by calculating your projected revenue.

Here are some examples that show why Revenue-Based Loans can be beneficial to a business.

No collateral needed

Many business loans require some form of collateral before they can approve you for a business loan. This causes the rates to be typically higher for Revenue-Based Loans, but for many businesses agreeing to pay a percentage of your monthly revenue back to the lender can be a more simple and stress-free strategy.

Receive funds quickly

After your application has been submitted and processed, you will only have to wait a short amount of time before you will receive your funds. This can be a great solution for businesses that need to access monies quickly.

Straightforward application 

Revenue-Based Loan applications are much more simple than traditional business loan applications. Once you have provided the lender with your company’s relevant past bank statements, you will then only have to fill out a short application and then wait for a few days to receive your funds.

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Who are Saffron Invoice Finance?

Saffron Invoice Finance is part of FCA regulated Saffron Asset Finance. 

It specialises in offering securitised working cash injections to viable SMEs businesses. Invoice Finance enables you to release the cash tied up in outstanding customer invoices, so you don’t have to wait weeks or months for payment.

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