Revenue-based financing or a line of credit?
Revenue-based financing pays out one sum, once, measured against deposits; a line of credit is a limit to draw on and repay as needed. The lender sets what it proposes and its cost, in its written offer.
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- What is the difference between revenue-based financing and a line of credit?
- Revenue-based financing is a sum paid out once, which the business repays out of its revenue on the lender’s schedule. A line of credit is a revolving limit: interest applies to the amount in use, and what is repaid becomes available again.
- When does one or the other come up?
- Revenue-based financing answers a one-time expense; a line of credit, a need that comes back. A file that does not support a line of credit can be presented for revenue-based financing, at the lender’s judgment.
- What does each one ask of the business?
- A line of credit usually asks for more time in business, stronger credit and regular deposits. Revenue-based financing rests mostly on the actual deposits in the business account; each lender sets its thresholds.
- Revenue-based financing or a line of credit: which one for my business?
- It depends on the need, one-time or recurring, and on what your statements show. We present the file to the lenders you authorize; each lender decides and writes its terms in its offer.
What the lender looks at
- Actual deposits, month by month
- The sum or the limit a lender considers follows what lands in the account.
- Days in overdraft
- An account often below zero weighs on both products.
- NSF cheques
- A returned cheque weighs on any file, and more so on a revolving product.
- How long the business has been operating
- A line of credit usually asks for more time in business than revenue-based financing.
$0 upfront · 7% only if funded
An intermediary, not a lender.
The lender sets the final amount and its cost in its written offer.
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