Mind sharing some stats on the typical repayment rates & approval requirements? This sounds like a great way to finance B2B/enterprise type startups with revenue coming in the door from day 1.
Not giving up any equity doesn't hurt either.
I've heard they generally work like this:
- Will lend you money equivalent to 1/4 to 1/2 your monthly or annual revenue/billings
- Take a % of revenue every month as repayment. Your repayment goes up or down with revenue which is a good feature.
- Take some warrant coverage as well (1/3 to 1/5 of the loan value)
Some will want to be hooked into your payment solution to take money right as it comes in but as we've not done it ourselves (have only looked at superficially), I'm not sure if that's all that common.
For B2B SaaS startups who can customer-fund to traction, this is the way of the future IMO. Unfortunately, the revenue-based financing guys aren't doing a great job marketing themselves primarily cuz their funds are quite small so far.
Hope that helps.
It makes a lot of sense. If you use Paypal for your business they have a good sense of your revenue, and they can be sure they're first in line for repayment.