Revenue Based Financing

Do you sell a physical product with sales over $150,000?

If you are looking to grow your business, revenue based financing is a terrific option. It provides you with the funding you need quickly and easily, and it does not require giving up equity or collateral. This article will discuss what’s involved with revenue based financing so you can decide if it’s the right step for your business.

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1000+

Deals Funded

$200M+

In Inventory Funding

99.5%

Funding Success

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Why choose Kickfurther for Revenue Based Financing?

Don’t pay until
you sell.


Your payment obligation only begins once your sales are made. This alleviates the cash-flow pinch that lenders cause without customized repayment schedules. Free up capital to invest in scaling your business without impeding your ability to maintain inventory

30% cheaper
funding.


Know your rates. When you compare ours, you’ll often see that you’re saving. We cost less than factoring, PO financing, and many lenders. We also have higher limits than competitors.

Fund up to $1 million
in an hour.


Once approved and the deal goes live, most deals fund within a day (often within minutes to hours), so you’ll never miss another growth opportunity.

It’s easy, it works, &
it grows with you.


Companies access higher funding limits and often get lower rates as they return to Kickfurther, creating a scalable solution that grows alongside your company.

“Tough Times Call For Creative Funding — Check Out
Kickfurther’s Clever Model”

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Revenue Based Financing Options

Revenue Based Financing

What is revenue based financing?

Revenue based financing involves investors agreeing to provide a company with capital in exchange for a percentage of its ongoing gross revenue. It is an attractive option for many businesses as it does not require the company to sacrifice equity or put up its assets as collateral. It also requires less documentation which makes for an easier, less time-consuming process.

How does revenue based financing work?

The revenue based financing structure is similar to debt financing because the company will be providing investors with regular payments in return for their initial capital. However, it does not require any interest.  You also won’t have to offer up collateral to investors or transfer ownership as you would in an equity model.

Platforms that provide funding will usually approve amounts that range from $10,000 to $10 million. Repayment is typically flexible so you can make higher payments when revenue is good and lower payments on slower months.

Why do you need revenue based financing?

Revenue based financing can be useful in the following situations:

  •   Your company is growing quickly, and you need more money to meet marketing needs and inventory demand.
  •   Your company is planning to expand and, while you have enough cash flow to stay afloat, you are not in a position to raise capital from investors, and you don’t want to give up equity.
  •   Your company just got a big order and does not have the funds to fulfill it, or it requires funds to fulfill it while maintaining abundant capital for optimal liquidity
  •   Your company has raised a seed round of investment, but you are setting it aside to meet capital needs and you need extra money to grow.

How is revenue based financing used?

Revenue based financing is used as a form of growth capital. There may be limitations on what you can use the money for put in place by the lender. In most instances, you can use it for a variety of business needs including marketing, sales, development, hiring staff and more.

Revenue Based Financing vs. Other Loan Options

When you compare revenue based financing to other types of loans, you may find it comes with its share of advantages.

It is preferable to venture capital which involves investors putting huge amounts of company in a business they believe in. This type of funding is terrific for getting expansion off the ground, but it comes at a high cost. It also often requires the company to give up equity and provide seat board control to investors.

RBF may also be easier to acquire than a bank loan as it does not require as much documentation which prolongs the approval process.

Is revenue-based financing a loan?

No, RBF differs from a loan in many ways. For example, it does not require interest or fixed payments. Rather, payments are proportional to revenue. It also does not involve collateral.

Revenue-based financing vs. debt financing

Debt financing involves the company raising money by selling debt instruments to investors. These include fixed income products like bonds, bills, or notes. It is a good option for some businesses because it does not require the company to give up equity.

However, RBF has its advantages over debt financing. For one, it only takes a portion of the revenue to recover the amount funded. This eliminates the pressure of paying fixed monthly installment.

Other benefits it offers over debt financing include:

  •   A more streamlined application process
  •   No collateral required
  •   Fewer covenant restrictions

Revenue-based financing vs. equity financing

Equity financing is the process of raising capital by selling shares of the company. Once you get into an equity financing situation, the lenders are brought on as shareholders of the business. They will have their say in business decisions and they will continue to collect profits until the relationship is terminated.

With RBF, only a small percentage of the business is shared with the investing platforms and ownership remains intact.

What are the requirements to qualify for revenue based financing?

Generally, requirements for revenue based financing include the following:

  •   An annual revenue of $200,000 or higher
  •   A consistent revenue with high gross margins (typically a revenue of at least $15,000 a month with growth margins of at least 50%)
  •   Profitability isn’t always required but it’s recommended for businesses to at least have a defined path to profitability
  •   Little to no existing debt
  •   Company diversity in that you are supplying products of services to at least five clients
  •   Location may also be taken into consideration; some platforms will only provide funds for businesses in certain countries

RBF is mostly exclusive to SaaS and technology companies as well as subscription-based businesses. And because the financing is largely based on sales and revenue instead of credit score and business history, revenue based financing for startups is a common option.

Is revenue based financing best for your business? 

Revenue based financing does not fit every business model. As previously mentioned, it is typically used for technology, SaaS and subscription-based businesses. If your company does not fall into one of these categories, you may have a hard time getting approved for RBF.  

However, if you do meet the category requirements, you may find that RBF is a terrific option. It eliminates the fixed loan payment structure which can be stressful and may even inhibit your business’s growth.

It also does not require you to give up equity which means you can retain 100% of ownership in your business.

How Kickfurther can help

Kickfurther can help brands that sell physical products with revenue between $150k to $15mm over the last 12 months. We connect brands to a community of eager buyers who help fund inventory on consignment. Brands can benefit from the flexibility to pay that back as they receive cash from their sales. Kickfurther is the world’s first online inventory financing platform that enables companies to access funds they are unable to acquire through traditional sources. Kickfurther has 800+ opportunities funded totaling $80mm+ and a 99% funding success rate.

 If you need inventory funding, you should use Kickfurther. At Kickfurther you can get funded within minutes. Here’s how to get started:

  • Create a free business account
  • Complete the application online
  • Review a potential deal with one of our account reps 
  • Get funded in minutes (funding times may vary)

Conclusion

When you set out in search of financing for your business, you’ll find there are several options to choose from. While research can require a time investment, it pays to fully understand all of your financing options. While revenue based financing may be the best option for some companies, it’s not the best option for all companies. We hope you better understand what revenue based financing is, as well as what other options may include.

Need funding? Visit Kickfurther today!

How does Revenue Based Financing Work?

Connect with consumers across the United States to get your
inventory funded via our marketplace

Create your online account

Create a business account, upload your business information, and launch your deal

Get funded within minutes to hours

Once approved, our community funds most deals within a day, often within minutes to hours, so you’ll never miss another growth opportunity.

Control your payment schedule

We pay your manufacturer to produce inventory. Make the introduction and you’re off and running! Outline your expected sales periods for customized payment terms. At the end of each sales period, submit sales reports and pay consignment profit to backers for each item sold.

Complete and repeat!

Complete your payment schedule and you’re done! Often once the community knows you, you’re likely to get lower rates on your next raise.

Other Industries

We fund inventory for direct-to-

consumer & major store brands

Where you’ve seen us

FAQs

How does inventory financing with Kickfurther work?

Brands access funding for new inventory (or can get reimbursed for recently produced goods) from marketplace participants. The marketplace allows brands to access private funding at costs that improve can improve with each use. Your funding goes directly to your manufacturer for production of goods and you makes no payments until you receive and begin selling new inventory

How can I create a new Kickfurther co-op?

Launching a project involves 3 key steps:
○ Create a basic profile including information about your business and product line. Once you’ve done this you can go live with an “upcoming Co-Op” profile that users can choose to follow to hear when your Co-Op launches.
○ Determine your Co-Op structure using the Kickfurther calculator to determine costs, earnings, and timeline.
○ Verify your Credibility Metrics with the Kickfurther team and finalize your Co-Op profile.

How fast will I get funded?

Once approved and the deal goes live, most deals fund within a day (often within minutes to hours), so you’ll never miss another growth opportunity

Does Kickfurther fund all deals?

Your business must be compliant with State and Federal regulations and have an established track record of sales. Kickfurther is for inventory financing so you must have a physical product. Finally, all businesses are subject to approval by the Kickfurther quality team