The Value of Flexible Financing in a Changing Environment
Every business, large or small, has its challenges. Common problems in today’s post-pandemic environment include price inflation for raw materials, supply chain issues, and rising energy and labor costs. It appears these challenges are changing daily. Unlike major corporations who have large cash reserves or easy access to lenders, your early stage or small diverse-led business–though profitable–may still need additional financing to remain successful.
When the sands of the economic environment are shifting beneath your feet, you need to find alternative financing methods. Revenue-based financing (RBF) offers a flexible funding model, and mentorship to help businesses meet the challenges of a changing economic environment.
Unlike venture capital where you exchange equity in your business for capital, RBF is non-dilutive. That is, you don’t need to sell ownership to get funded. You maintain full ownership of your enterprise, and your lenders can serve as valuable mentors. Because the timely return of your lender’s funding depends on a healthy revenue stream, you and your lenders’’ goals for your business align.
No Endangered Assets
Traditional business loans, if available to you, may demand personal assets as collateral. These loans require fixed monthly payments covering a portion of the principal and accumulated interest. If the changing environment surprises you with inflated costs, preventing you from making your payment, the lender could take the assets you pledged. In an RBF arrangement, your business assets and monthly revenue provide the loan guarantee.
Your customers are feeling the pinch, too. You’ve raised your prices to maintain margin in an environment of increasing costs. But how much is too much for your market? Until your customers settle into the new normal created by inflation and rising costs, your revenues may suffer. With RBF, you don’t have a fixed, rigid payment each month; your payment rises and falls with your monthly revenues, offering flexibility in changing economic times.
Can RBF work for you? RBF is not only flexible, but also readily available to profitable minority- owned and diverse-led businesses like yours! You can do your homework and choose the lender who best aligns with your interests, a lender familiar with your industry and eager to become a valued partner. Contact Founders First Capital Partners to see how RBF can offer you financing flexibility in a changing economic environment.