What is a Revenue based Loan?

A Revenue Based Loan is an option to get cash immediately for your business, in exchange for funds deducted directly from your credit/debit card payments in the future. It’s not as difficult as other loans to quality for a Revenue Based Loan, so business owners with little collateral, history in business, or a low credit score may benefit from this option.

You know that you need a small business loan, but you have two main problems with the traditional loan format. First, your business goes through cycles. You have slow periods right before business really picks up. During the slow periods, you can’t afford to pay the same amount on your business loan as you can pay during the rest of the year. However, traditional small business loans demand the same payment amount no matter how your business is doing. Second, you don’t have the credit or collateral that most banks demand for their business term loans. However, you do have steady debit and credit card sales no matter the season.

Does this situation sound familiar? Then you may need a Revenue Based Loan.  Revenue Based Loans have some similarities with term business loans. For example, you can use a merchant cash advance for all of the same things that you could use a term loan for. However, the difference is in the how you pay the money back. With a Revenue Based Loan, your payments come directly from your credit and debit card sales. Keep reading to get a closer look at how these loans work.