How a Fiduciary Financial Advisor Can Guide Your Creative Financing Journey
Traditional loans and equity financing have long been the go-to solutions, but they come with significant drawbacks, such as the risk of losing control over your business or accumulating debt.
What is Revenue-Based Financing:
Revenue-based financing (RBF) is an alternative funding option that appeals to growing businesses.
Instead of traditional loans or equity financing, RBF provides capital in exchange for a percentage of the business’s future revenues until a specified amount is repaid.
The Role of a Fiduciary Financial Advisor:
A fiduciary financial advisor acts in the best interests of their clients, ensuring you get tailored advice that factors in your business’s specific needs and circumstances.
Why Choose Creative Financing?
Unlike standard bank loans, which often require collateral and a lengthy application process, creative financing options, like revenue-based financing, focus on a business’s potential profitability.
How Revenue-Based Financing Works
The mechanics of RBF are relatively straightforward:
– Businesses apply for RBF by presenting financial statements, revenue trends, and growth projections.
– Investors assess the company’s ability to generate steady revenue.
2. Capital Disbursement:
– Upon approval, the investor provides the agreed amount of funding upfront.
3. Revenue Sharing Agreement:
– A percentage of future revenue is allocated to repay the funding.
– The agreement continues until the total repayment cap (initial funding plus a predetermined premium) is reached.
4. Flexibility in Repayment:
– Payments adjust automatically based on monthly revenue, reducing financial strain during downturns.