Last updated on May 28th, 2025 at 04:09 pm
Despite the high cost that comes with Revenue Based Funding there are three top reasons that make this type of funding appealing to Small Business Owners as a solution to their funding needs.
1.) Quick Access to Capital
When a Small Business Owner has the opportunity to buy inventory at a great discount, or when an infusion of cash is needed to take advantage of an upcoming project for a new client, or when an important piece of equipment breaks down, the Small Business Owner finds themselves in need of fast funding.
Traditional Lenders such as Local banks and Credit Unions often have lengthy approval processes and eligibility requirements are quite strict and when a Small Business owner needs funding fast, a viable alternative is required.
Revenue Based Funding can meet the needs for this type of fast funding as Revenue Based Funding mostly relies on the businesses daily sales and relies less on credit scores and piles of paperwork.
Revenue Based Funding can have the funds available to the Small Business Owner within 72 hours of submitting the application.
This process can enable the Small Business Owner to take advantage of opportunities that can contribute to the growth of their business.
This type of funding can be a great resource for seasonal businesses to address unexpected expenses and the speed of funding can help a to acquire inventory, launching a marketing campaign, or address an urgent cash flow gap.
2.) Flexible Repayment Structure
Traditional loans usually have a fixed monthly payment which can cause some stress to the Small Business Owner, while Revenue Based Funding has a flexible repayment schedule that takes into consideration the sales volume of the business.
Since Revenue Based Funding is repaid as a percentage of sales volume the payment can adjust to address slower sales and increase during peak sales periods.
This flexibility makes it appealing to Small Business Owners that experience fluctuating revenue such as retail stores, restaurants, landscapers, and other seasonal businesses.
The flexibility of the MCA helps to manage the variations in revenues for the business.
3.) No Collateral Requirement
Traditional Loans often require some type of collateral, such as real estate, equipment, or stocks, to secure the loan which can be a barrier for Small Business Owners that do not have substantial assets.
Revenue Based Funding eliminates the need for the Small Business Owner to pledge any asset as collateral.
Rather than focusing on assets or credit scores, Revenue Based Funding relies on the company’s sales and business revenue as reflected on bank statements to approve the funding.
As such, this makes Revenue Based Funding more accessible to Small Business Owners with few assets and low credit scores.
So even though Revenue Based Funding comes with higher costs, the type of funding is a viable option for the Small Business Owner who has a low credit score, very little collateral, and a short window to take advantage of a business growth opportunity.
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