Home Advertise Contact Blog Advertiser Login RSS
Newsletter Signup

Buy A Business Opportunity of Franchise
Home-Based Businesses
Choosing a Business Opportunity Growth and Profit Marketing and Sales
Plans and Goals Running Your Own Business Start-Up
Working From Home Entrepreneur Exchange Feature Articles
Opportunity Community Opportunity Focus In The News

Female celebrities are breaking the stereotypes of Hollywood and diving into the world of business. Check out how these women are using their fame, fortune, and power to start their own companies. From media production to makeup, these Top Female Celebrity Business Owners are doing it all!

As...

With only a few weeks lefts in 2017, it’s time to get organized now! The holidays are around the corner and you don’t want to be scrambling at the end of the year. Use these Small Business Organization and Tax Tips to End 2017 to help you keep the end of the year stress to a minimum.

Happy...

Entrepreneur Natural Disaster Tips - Top 50 Things for Business Survival

Hurricane’s Harvey and Irma have taken a toll on many home-based, work-from-home,...

Sponsors

STARSCAPES®
Imagine making up to $500 to $1,800 a day! Call or click now see how you can get your business for FREE! (602) 679-0257
Promotional Products Home Business
Run Your Own Business. Be Your Own Boss. Earn Great Profit Potential. Start At A Low Cost. Try It For Free! Learn More.
Residual Income Business Opportunities
Residual Income is the way that you work once and get paid multiple times—sounds great!... Read On
Top 7 Reasons to Consider a CMS
The internet loves obscure abbreviations. You can skip over most of them, but not CMS. What is CMS? read on...
The Ideal Length of Everything Online, Including Social Media Posts
When one of your busiest marketing channels limits you to 140 characters, you know that the internet sets its own rules.
Low Cost Business Opportunities to Own
Are your right for a Low Cost Business Opportunities to Own? The desire to own your own business... Read On
Why Advertise Your Business Opportunity?
Over the years we have been fortunate enough to receive quite a few testimonials. In fact, ... read on
The Top 10 Reasons to Buy a Business Opportunity or Franchise
Starting your own small business is part of the American Dream, right up there with owning your own home. Read On
7 Keys to Leading Highly Effective Sales Conversations
Most people's sales conversations could be better. Not a little better, significantly better. Read On
National Property Inspections
Flexible work schedule, no experience needed, and complete training and support available!
How Many Leads Does It Take To Close A Sale?
This Featured Article is live on our blog and I know could be very insightful for connectivity and ROI.
Top 50 Home-Based Business Ideas
Home-Based Business ownership can be the most rewarding endeavor you will ever undertake. The new year... Read On
I Want To Buy a Business Opportunity or Franchise
Who are the types of people who buy a business opportunity or small franchise? According to people in... Read on
Copying & Publishing Business Opportunities
Today creativity abounds in the printing and publishing space with more unique business solutions than ever imaginable.
 
Resource Center > Article
Revenue-Based Financing Offers Small Business Funding Alternative
10 Aug 12 Posted by: Kathleen C Lanza
in Featured Articles
Share this Article:

While 77% of small business owners either did not need additional credit to stay in business or were able to obtain all that they needed this past year, 20% who have borrowed and now owe money have struggled to find much-needed funds, according to a recent Wells Fargo/Gallup Small Business Index poll. Whether it’s to make running their day-to-day operations easier or expanding their product/service portfolio, hiring employees or just making payroll, being able to borrow money for a number of small business owners seems to be at a bit of a premium these days.

Enter revenue-based financing, a relatively new approach to borrowing and lending that is a cross between a traditional bank loan and tapping into venture capital. According to the recently formed Revenue Capital Association, which now comprises about a hundred lending groups, the basic set-up goes something like this: A firm (or firms) invests in an established business or startup, and the business pays it (or them) back in accordance with its monthly earnings. It’s a great pay-as-you-go option for businesses that are passed over by venture capitalists or angel investors and do not want or qualify for a traditional bank loan.

On the face of it, this arrangement may seem fairly straightforward and simple, but the truth is that it is as nuanced and complex as any other lending option out there. In other words, revenue-based financing comes with its own pluses and minuses, making it the perfect fit for some small business owners and not so much for others.

As is true of most things, understanding the potential pros and cons is what allows a small business owner to know if the idea of revenue-based financing is worth pursuing. So here’s a quick overview:

The pros of revenue-based financing:

• Oftentimes faster and less painful than more traditional lending options

• No conflict over valuation

• Focuses more on revenue models, business situations and cycles throughout the year than it does on personal history or FICO scores

• Investors look for a good or great product or service as opposed to a given company or team

• Does not require a business owner to give up his/her equity in the company

• Offers more payment flexibility given it is variable and pegged directly to revenue

• Payback amounts are limited (or capped)

• Does not require a track record of profitability, rather funds are awarded on a prospective as opposed to a retrospective basis

• Does not require a personal guarantee of assets, such as real estate, a home or other possessions, so borrowers only risk losing what’s left of their business should things go badly

• Very favorable option for seasonal businesses that have predictable bursts of cash flow

The cons of revenue-based financing:

• Much riskier than a traditional bank loan

• Usually does require an applicant background check of some kind

• Returns vary, but are almost always higher that a typical bank loan, making this option a relatively expensive one

• Borrower pays a pre-set percentage of revenue until the principal is paid off, plus a return, which can be as high as 18 to 20 percent or more

• Having to pay investors back as a set percentage of profits can severely limit the small business owner’s ability to reinvest necessary capital in their company, which can in turn stall growth or even result in failure

• Delinquency of payment after a set time period results in the borrower losing everything―their business, patents, domain names, trademarks, etc.

While the revenue-based model is particularly gaining traction among startups, there have been many instances where relatively young and promising companies have also benefited from this fairly new financing approach.  It's just one more example of how the free-market system evolves to meet the demands of an ever-changing marketplace, and many small business owners are grateful to have yet one more option to get the funding they so desperately need, especially when all other doors have closed.

Related Blog Posts
10 Nov 17 Posted by: Margaret Mallonée
in Featured Articles

Female celebrities are breaking the stereotypes of Hollywood and diving into the world of business. Check out how these women are using their fame, fortune, and power to start their own companies. From media production to makeup, these Top Female Celebrity Business Owners are doing it all!

As...
1 Nov 17 Posted by: Margaret Mallonée
in Featured Articles

With only a few weeks lefts in 2017, it’s time to get organized now! The holidays are around the corner and you don’t want to be scrambling at the end of the year. Use these Small Business Organization and Tax Tips to End 2017 to help you keep the end of the year stress to a minimum.

Happy...
2 Oct 17 Posted by: Kevin James Culp
in Featured Articles

Entrepreneur Natural Disaster Tips - Top 50 Things for Business Survival

Hurricane’s Harvey and Irma have taken a toll on many home-based, work-from-home,...
2 Oct 17 Posted by: Margaret Mallonée
in Featured Articles

October’s Book-of-the-Month is Tools of Titans by Tim Ferriss.

Does the name Tim Ferriss sound familiar? You’ve probably heard it many times before. Tim Ferriss is a #1 New York Times best-selling author of the critically acclaimed book, The 4-Hour Work Week. He also...
28 Sep 17 Posted by: admin
in Featured Articles

Managing Risks in MMA Events - The explosive growth of mixed martial arts, or MMA, is well known and widely acknowledged. As with all live events, promoting MMA matches involves financial, operational, reputational, property damage and various legal concerns. Steps must be taken to assess and address...

 
   

I had the pleasure of chatting with Shawn Pigg, CEO of Hotels Etc. for BusinessOpportunity.com's Podcast series that will be released very soon on our new Digital Platform.  Here is the transcript from that call for our regular RSS feed subscribers who get all of our posts first.

If you would...
Read More


Premium Sponsor