At Cavala Funding, Revenue-Based Financing (RBF) provides a flexible way to fund your business growth. Instead of fixed payments, you repay a percentage of your revenue, aligning your payments with your cash flow. This approach means you only pay more when you earn more, and less when revenue slows down. It’s an ideal solution for businesses with fluctuating income, offering the capital you need without the burden of traditional debt.
Revenue-Based Financing (RBF), also known as sales-based financing, is a funding option where businesses receive an upfront sum of capital in exchange for a portion of their future revenue. Payments are typically made daily or weekly until the agreed total amount is repaid. The total repayment is determined by underwriting, which considers factors like the business’s monthly revenue, growth expectations, and time in business. The percentage of revenue to be remitted is fixed when the agreement is made, ensuring predictable and manageable payments.
A key feature of Revenue-Based Financing (RBF) is that payments are tied to a fixed percentage of the business’s revenue. This alignment ensures that both the business and the RBF provider share a common goal—business success. If revenue decreases, the business can request a corresponding reduction in payments without incurring fees or penalties. Some agreements may even allow for a pause in payments during periods of financial difficulty. This flexibility makes RBF a viable option for managing cash flow during slower periods.
With Revenue-Based Financing (RBF), if a business isn’t generating revenue but adheres to the contract, no payments are required until revenue resumes. If the business faces bankruptcy or closure, as long as the terms of the agreement are followed, no further payments or personal liability are incurred. It’s crucial for businesses to understand the terms of their RBF agreement, including how changes in revenue affect payments. Reputable RBF providers may offer courtesy payment pauses or reductions to support the business during tough times.
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