Business cash advance (revenue loan)

Quick facts

This newer type of business loan allows you to ‘sell’ a portion of your company’s revenue in exchange for an advance of capital. So, instead of paying back a fixed amount each month, as you might do with a traditional loan, you pay the lender an agreed percentage of your monthly sales until the advance, including interest, is paid off in full.

A business cash advance is a type of lending that’s based on your future revenue. It comes in a few different forms, the most common of which is a merchant cash advance. You’ll also hear it referred to as a revenue loan, a revenue loan or revenue-based financing.

A business cash advance may be useful if you have a seasonal business, because it means you can align repayments to your trading peaks and troughs – you can pay back more when sales are higher and less when sales are lower.

It could also be a good option if you find you’re not eligible for a bank loan, but you don’t want to part with company equity. Business cash advances are more expensive than bank loans.Perhaps the most popular type of business cash advance is the merchant cash advance. You might also want to look at supply chain finance.

You might also want to look at supplier finance (i.e. supply chain finance).

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Disclaimer: Swoop Finance helps South African firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans or other finance products ourselves. We can introduce you to a panel of lenders, equity funds and grant agencies. Whichever lender you choose we may receive commission from them (either a fixed fee of fixed % of the amount you receive) and different lenders pay different rates. For certain lenders, we do have influence over the interest rate, and this can impact the amount you pay under the agreement. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Swoop Finance can introduce applicants to a number of providers based on the applicants’ circumstances and creditworthiness. Swoop Finance (Pty) Ltd is registered with CIPC in South Africa (company number 2023/820661/07, registered address 21 Dreyer Street, Cape Town, South Africa, 7708).

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