Question 1

What is Revenue Financing (RF) or Revenue-based Financing (RBF)?

Accepted Answer

Revenue Financing (RF) is a cross between equity investment and debt financing. It provides capital that is paid back over time like debt, without requiring personal guarantees or collateral. Payments vary based on your sales. Unlike traditional equity, once you repay the investment plus a pre-negotiated return, the investor is not on your capitalization table permanently.

Question 2

How do I repay the investment?

Accepted Answer

The investment is repaid over time (typically 3-5 years) through a percentage of your revenue — called the Revenue Rate — until the pre-negotiated Investment Return is reached.

Question 3

What is the Revenue Rate?

Accepted Answer

The Revenue Rate is the percentage of your Cash Receipts used to pay down the Investment Return each month. The payment amount varies based on monthly cash receipts, but the percentage stays consistent, typically between 3-8%.

Question 4

How is Revenue calculated?

Accepted Answer

Payments are based on Cash Receipts (actual customer payments) rather than GAAP Revenue. This results in larger payments when your company has more cash and smaller payments when less cash is available.

Question 5

What is the Investment Return?

Accepted Answer

The Investment Return is the total amount your company pays over the life of the investment, negotiated upfront. Sage generally looks to receive 2x to 3x the initial investment (e.g., invest $100K, receive $200K-$300K over the life of the investment).

Question 6

Why is a variable payment a good thing?

Accepted Answer

Variable payments tied to actual cash received help early-stage companies manage cash flow. When sales are low, your payment is reduced. When sales are higher, you make a larger payment. Simply put: when sales go up, the payment goes up; when sales go down, the payment goes down.

Question 7

Is Revenue Financing expensive?

Accepted Answer

RF is more expensive than a traditional bank loan, but less costly than selling equity to an Angel investor who may seek a 10x return, impose board seat requirements, and remain on your cap table until an exit. If a bank loan isn't available under acceptable terms, RF is a strong alternative.

Question 8

How does the investment end?

Accepted Answer

Unlike traditional equity, RF does not require an exit such as a business sale or IPO. The investment ends when your company has fully repaid the Investment Return, which can happen at any time during the life of the investment.

Question 9

What if I don't repay the investment on time?

Accepted Answer

The investment has a due date by which the full Investment Return must be paid. If funds are still owed at that date, Sage has the option to either demand payment or convert any unpaid Investment Return into stock.

Question 10

What makes Sage Growth Capital unique?

Accepted Answer

Unlike many RF investors, Sage Growth Capital does not secure investments with personal guarantees, UCC filings, or other restrictions, preserving your ability to arrange other financing. Sage also does not maintain equity ownership after the Investment Return has been reached.

Question 11

Why do you call this 'flexible' financing?

Accepted Answer

Key variables — the Revenue Rate, Investment Return, and investment timeframe — can all be adjusted to meet the needs of both the entrepreneur and Sage's investors. During due diligence, Sage will ask what matters most to you: total amount repaid, timeframe, or size of the Revenue Rate, and will offer terms incorporating those preferences.

FREQUENTLY ASKED
QUESTIONS

What is Revenue Financing (RF) or Revenue-based Financing (RBF)?

How do I repay the Investment?

What is the Revenue Rate?

How is Revenue calculated?

What is the Investment Return?

Why is a variable payment a good thing?

Is RF Expensive?

How does the Investment end?

What if I don’t repay the investment on time?

What makes Sage Growth Capital unique?

Why do you call this ‘flexible’ financing?

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FREQUENTLY ASKED QUESTIONS

What is Revenue Financing (RF) or Revenue-based Financing (RBF)?

How do I repay the Investment?

What is the Revenue Rate?

How is Revenue calculated?

What is the Investment Return?

Why is a variable payment a good thing?

Is RF Expensive?

How does the Investment end?

What if I don’t repay the investment on time?

What makes Sage Growth Capital unique?

Why do you call this ‘flexible’ financing?

FREQUENTLY ASKED
QUESTIONS