Revenue-Based Financing Offers a Flexible Route for Cash A loan that provides capital in exchange for a fixed percentage of gross monthly revenue is gaining new traction among startups. For some borrowers, it can be an attractive alternative to a traditional bank loan.
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Six years after founding YogaDownload, Jamie Kent was stuck. Her Denver-based company could pay its bills, but she needed cash to create new classes and attract customers. She was beyond using her credit card, and the bank loan terms she saw were Draconian.
"I only needed a small injection of money to get the ball rolling, without the fear of heavy payment terms," Kent says. An online search for "small-business financing" led her to revenue-based financing (RBF). "It seemed like a perfect way to cash-strap my company," she recalls.