Financing Growth
Revenue Loans
A relatively new way to finance Start-Ups through revenue sharing. Zero dilution and repayments that are pro-rata to revenues, but at the cost of stricter repayment terms, a strict amortisation schedule and a higher establishment fee.
1
Eligibility
You have revenues of at least £100,000 a month, and either a track record of receiving those revenues for 6 months, or contracts that total up to that amount and whose duration exceeds six months.
2
Purpose
The purpose of a growth loan is usually to either
- Finance the set-up costs of providing a contract, or
- Accelerate sales growth
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There usually will be no significant covenants on the use of proceeds, but there will be strict covenants on monthly interest and capital repayments. We will hold a fixed and floating charge over the business for the duration of the loan and will usually need to the senior-most lender.
3
Timing & Size
Growth Loans can be executed at any time.
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Due diligence usually takes about a week from the time we have received all necessary information.
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The loan is usually structured so your monthly payments (capital and interest) do not exceed 25% of your monthly revenues, and the loan term is usually between 6 months and 1.5 years.
4
Typical Terms
Establishment Fees: 5%-10%
Interest Rate: 2-3% per month
Warrant: None
Duration: 6m - 1.5 years, monthly amortising in-line with revenues
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The exact terms will depend on the company's financial strength and duration of the loan (longer loans will tend to carry a higher interest rate).
