How It Works
Payments Are a Percentage of Revenue
Revenue-based financing, also known as sales-based financing, is a type of funding for businesses that provides an upfront sum of working capital in exchange for a set amount of the business’s future revenue that the funder has purchased. The business then remits an agreed-upon percentage of its revenues (typically on a daily or weekly basis), until the total revenues purchased have been remitted in full.
If Revenue Decreases, Payments Can Too
Because payments are a percentage of a business’s revenue, if revenue decreases, payments can too – without fees or penalties. Payment relief is part of our product, and all customers following the terms of their contract are entitled to use it as needed. And if the customer has no business revenue, there will be no requirement to pay. The owner will not be held personally liable, as long as they abide by their contract.
Total Payment Amount Is Fixed
Once the total dollar amount of revenues to be remitted is agreed upon, it is fixed and will not change, no matter how long the payment period may last. No interest ever accrues on our product. And the entire account balance can be paid in full at any time with no extra charges for early payment.
Important Considerations
We Look at Revenue, Not Expenses
Because we purchased a portion of the business’s revenues, that is the only financial metric we look at throughout the course of the contract. That’s why we offer payment relief based on changes in the business’s revenue. One way to think of it is that we look at a business’ inflows, NOT its outflows.
Contact Us Whenever There Is a Decrease in Revenues
If your business experiences a change in revenues, reach out to us as soon as possible so we can update the payments being remitted to match your revenue flow. Payment relief is part of our product, and all customers are entitled to use it as needed.
We Report Customer Performance to Experian Business Credit
Once a customer has received working capital from Capital Funds, we report on the customer’s performance against the terms of their contract on a monthly basis to Experian Business Credit, who in turn calculates business credit scores. Our part is simply reporting whether each customer is in good standing or poor standing. To be in good standing, the customer is either making payments or committed to a payment plan with our Account Servicing team. If a customer’s revenue decreases and they notify us, as outlined in their agreement, we will adjust their payments to align with their revenue. Should a customer take advantage of this revenue-based financing benefit, they will still be reported as good standing. For small businesses with good payment history, this is a unique opportunity to get revenue-based financing while building business credit.