What is revenue-based financing?
Revenue-based financing is a funding model where investors provide capital in exchange for a percentage of future revenue.
How does it differ from traditional loans?
Unlike traditional loans, revenue-based financing doesn't require fixed monthly payments; repayments are based on revenue performance.
What are the benefits of using this type of financing?
Benefits include flexible repayment terms, no equity dilution, and it aligns investor interests with business growth.
Are there any downsides to consider?
Yes, potential downsides include higher overall costs if revenue grows significantly and the need for consistent revenue to meet payments.
Who typically uses revenue-based financing?
It's commonly used by startups and small businesses with predictable revenue streams looking for growth capital.
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