What is a revenue based loan?
A revenue based loan is a form of specialist business funding that allows the borrower to repay the loan via a percentage of the monthly sales that the business makes. There is no interest charged, but rather an upfront fixed amount that needs to be paid.
How can I apply for a revenue based loan?
A business can apply for a revenue based loan by applying online via the For Kredit website. We’ve developed a quick and easy online application that allows businesses to submit an application in a matter of minutes.
How much can I borrow for a revenue based loan?
Businesses can apply for a revenue based loan between £1,000 – £500,000 when applying with For Kredit.
Am I eligible for a revenue based loan?
In order for a business to qualify for a revenue based loan, it must meet the following criteria:
- The business must have been trading for a minimum of six months.
- The business must generate over £1,000 in monthly card sales (whether that’s physical card machines or online).
- The business must be registered as a limited company.
- The owner is a UK resident and over 18 years-old.
How does a revenue based loan work?
Here is an example of how the revenue based loan works:
- A borrower decides to borrow £50,000.
- As there is no interest, the borrower needs to pay a fixed fee upfront. The borrower is offered a fixed fee of 10%, which brings the total cost of the loan to £55,000.
- The borrower decides what percentage of their future monthly revenue they would like to dedicate to repaying the business loan. They decide to dedicate 20% of their future revenue.
- In the first month, the business makes £6,000 worth of sales therefore they repay £1,500 (20% of £6,000) to the lender. The next month is slightly quieter and the business makes £1,000 in sales, therefore the repayment amount changes so they repay £1,000 (20% of £1,000) to the lender.
The business continues to make the monthly payments until the full loan amount is repaid to the lender.
What are the benefits of a revenue based loan?
A flexible loan: A key benefit of the revenue based loan is that it works in tandem with how your business is performing. It means that when your business is making lots of sales, a greater amount of the loan is repaid. When your business is making a smaller amount of sales, the business has to make a smaller amount of repayments.
Quickly access funds: The application and funding process is super quick, which means that businesses can receive the money they need within 24 hours of their application being submitted and approved. This is an option for businesses that are interested in raising capital quickly.
Suitable for many business types: Revenue based financing is suitable for many different business types, whether it’s a small business, medium-sized business provided it’s a limited company. As long as the business makes +£1,000 a month in card sales and has been trading for 6 months, they are eligible for funding.
I have bad credit, will this affect my application?
A revenue based-loan is performance-based as it is determined by the monthly card sales that the business makes. This means that revenue based financing is suitable for business owners who may not have a perfect credit score.
What is the interest rate on a revenue based loan?
There are no interest rates attached to revenue based funding. Instead, there is an agreed fixed percentage to repay upfront. For example, if you decided to borrow £25,000 the business owner might be asked to pay a fixed percentage of 10% (£2,500) upfront, bringing the total cost of the loan to £27,500.