Summary
Revenue-based financing is revolutionising how small businesses borrow money. More so for digital businesses that start with fewer assets. Keep reading to learn all about digital business financing.
- What is Revenue-Based Finance?
- How Revenue-Based Finance Benefits Digital Businesses
- GetVantage’s Revenue Financing Solutions
- Steps to Apply for Revenue-Based Finance
- Is Revenue-Based Finance Right for Your Business?
- In a nutshell
What is the single most important thing for a business to remain afloat? Revenue. And what is the blood of any company? Finance. Now imagine a scenario where a small company or a Startup wants to expand its business but cannot do so because of a shortage of funds. Yes, paucity of capital can be the death knell for any business. Only digital MSMEs in India are going to need USD 570 billion as credit up to 2025.
Enters Revenue-based financing. This alternative finance is gaining popularity, especially among digital businesses because it’s collateral-free and non-dilutive. In this blog, we cover everything you need to know about how digital business financing works and how you can benefit from it.
What is Revenue Based Finance?
Can a perfectly working plane take off without a runway? Similarly, a startup, a digital business, or a company needs runway finance to take off. When it comes to business finance, it is natural to think of these traditional methods:
- Bank Loans
- Equity Shares
- Venture Capitalists
- Bonds and Debentures
- Working Capital Finance
While they all are popular modes of finance, they all have a few demerits. While equity and venture capital dilute the controlling interest of the owners, loans involve rigid repayment terms and mortgages or pledges of assets.
Is there a solution to this problem? Yes. Revenue-based finance. Although traditional finances are also repaid using revenue, the dilution of control on assets is a big problem. The revenue-based alternative provides equity-free funding to companies keeping their interest intact in the business.
To be precise, fast-growing companies can exchange a percentage of their future revenues for business finance. As digital business financing is tagged to revenue, they allow flexible repayment terms. If your revenue is high, you repay more amount, and vice versa.
How Revenue-Based Finance Benefits Digital Businesses
Now you will ask, what are the benefits of Revenue-based funding for digital businesses? In short, it is the ideal finance for businesses that operate mostly digitally. Here are the benefits of obtaining this non-dilutive funding:
- Flexible Repayments: Online businesses operate with limited capital. It also takes time for the business to become popular. Revenue-based finance allows digital businesses to make flexible repayments by linking them to future revenues. If the revenues dip, you pay less. This helps in managing cash flows and keeps the business afloat.
- Non-dilutive funding: Equity or venture capital are popular methods of financing. But, the controlling interest of the owners in the business gets diluted. Equity-free funding allows you to keep the ownership of your business while getting the required finance to scale the operations.
- Collateral-free: Small digital businesses often lack the assets that can be kept as collateral for getting loans. Unlike loans, revenue-based finance only requires pledging a percentage of your future revenue.
- High Growth Finance: Revenue-based finance supports high-growth businesses rather than suppressing their expansion.
GetVantage’s Revenue Financing Solutions
GetVantage is the leading platform that provides digital business financing in India. Within a span of 4 years since its establishment, it has become the first choice for businesses from over 25 sectors. GetVantage has provided revenue-based finance to more than 1,500 businesses and counting.
Finding our drive from the visionary OCEN initiative of the Indian government, our sole motive is to become a part of your growth story. Here are some characteristics of the GetVantage revenue-based finance:
- Easily get funding from Rs. 20 L to Rs. 20 Cr.
- Get the offer within 48 hours of application.
- A flat fee. No hidden costs.
- No fixed EMIs.
- No dilution, collateral, or loan guarantee is needed.
- Repayments depend on the speed of your revenue.
Apply now for our digital business financing.
We also provide Embedded finance, fixed-term loans, Saas runway capital, and Marketplace seller financing.
Steps to Apply for Revenue-Based Finance
To get GetVantage revenue-based finance, you should follow these 3 easy steps:
Step 1: SignUp
To sign up, add your business details like:
- Business Name
- Website
- Email address
- Contact number
Step 2: Connect your Accounts
Connect your marketplace accounts with our credit engine. We ascertain your credentials and eligibility. To obtain revenue-based finance from GetVantage, you should fulfill only 3 basic eligibility criteria:
- Your business should follow a digital-first model
- 6+ months of proven sales and growth track record
- Monthly revenue > Rs. 5 lakhs
Step 3: Select an Offer
We offer fast funding to our customers. To keep up with our promise, we assess your business and provide an offer within 48 hours of your application. Once you receive the revenue-based funding offer, you can accept and get the loan asap.
Is Revenue-Based Finance Right for Your Business?
Now that we have discussed revenue-based finance and its benefits for digital businesses, you should compare it with traditional funding methods. It will give you a clear picture, of whether you should opt for digital business financing or not:
| Factors | Revenue-Based Finance | Traditional Finance |
| Flexible Repayment | Yes. Tied to revenue. | No. Fixed monthly EMIs. |
| Equity Dilution | No. | Yes. |
| Collateral Needed | No. | Yes. |
| Speed | Extremely fast, no paperwork. | Slow with paperwork burden. |
| Hidden Costs | No hidden costs. Flat fee. | Additional costs like Stamp duty, processing fees, valuation, and search expenses. |
| Supports Growth | Fully supports business growth. | Fixed payments hamper cash flows when revenues dip. |
In a nutshell
If you are a digital business in India and are fast-growing, getting revenue-based finance can help you change the fortune of your business. With flexible repayments, non-dilutive funds, and collateral-free loans, digital business finance is truly business-friendly and aids fast growth.
