Innovative Capital for Small Businesses: The Rise of Revenue Based Financing
LISC Strategic Investments Team- Jan 11, 2024
- 1 min read
by Bruce Katz, Michael Belles and Bryan Fike
Since we launched the Innovative Finance Playbook in November 2022, Catalyze and the Nowak Metro Finance Lab have been assessing Revenue Based Financing, or RBF, as a tool to help address the capital gaps and deficiencies laid bare by the COVID pandemic; namely, the 83% of entrepreneurs who do not access traditional bank debt and venture capital. We recently released a report sharing our findings entitled "The State of Revenue Based Financing and CDFIs.”
The report, informed by Catalyze’s peer group of 10 mission-driven lenders piloting RBF in their portfolios, provides a practical guide for CDFIs and other mission-driven capital providers to develop RBF products. It explores an emerging spectrum of RBF providers, addresses challenges, and offers resources for RBF implementation, all contextualized with case studies of real RBF deals.
Figure 1: The RBF Spectrum
Revenue-based financing is becoming a game-changer for small businesses, giving them access to growth capital without the pressure of traditional loans. I think it reflects how financing is evolving to meet modern entrepreneurial needs. If you’re exploring this path and looking for a scalable base to operate from, source from here has listings that match the rhythm of your business goals. A flexible lease can offer breathing room while you grow revenue at your own pace.
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