Advantages of Revenue Based Financing
Of utmost importance to many business owners is the smooth and successful running of a business. The need for loans can’t be totally eliminated by businesses. You may be looking to join a new venture or start a new operation. The funds necessary to finance this may not be available to you. You will appreciate a business loan in such a situation. Small businesses, unlike their larger counterparts, are not always able to access these loans. This is where revenue based financing comes in. Unlike with conventional loans, revenue based financing is available to small businesses that may not have the collateral needed to get a conventional loan. Even with a poor credit score, a small business can obtain finances to fund their operations. This form of financing has proven to be very beneficial to small businesses. Its popularity stems from its many benefits. Below are some of the benefits of revenue based financing.
With this form of financing, the application process is simple. Loan approvals are harder to come by due to the recent financial crisis. Applying for traditional loans involves filling in a lot of paperwork which is time-intensive. Traditional loans involve a lot of paperwork. Revenue based loans can have as little as only one form for the loan application. The application process is made simpler as there are only two other documents required; bank and merchant account statements. Conventional financial institutions usually require many documents. Revenue based financial takes a significantly shorter amount of time for the loan to be approved. This makes revenue based financing ideal when you need emergency funding for your business.
With traditional loans, having a good credit score is necessary. Getting a loan approved with a bad credit score is almost impossible. With revenue based financing, it is different. Institutions that offer revenue based financing look at your current state, not your past. The funding made available to you is determined by your sales. Collateral is not necessary with this form of financing. Loan collateral is often not available to small businesses. This makes revenue based financing a great option.
Revenue based financing institutions provide their clients with a more flexible model of payment. This proves beneficial to businesses in many ways. You can’t always predict the income of a business. Payments are usually not fixed and therefore in case business is low, you don’t have to strain your resources. A business can be able to repay their loan within a short period of time. To learn more on this, visit Dealstruck.