When it comes to revenue-based financing, it’s important to do your research. Not all lenders are created equal, and you need to make sure you partner with a reputable company that has your best interests at heart.
Partner mentality, competitive terms, history of investing, and dependable and timely funding are the things you should consider when choosing a lender. Read on to learn more.
Once you start a company, you’re going to run into a number of people offering you money — but not all of these people will be able to offer you the support and guidance needed to truly grow. When you’re choosing investors, you don’t want someone who just hands you money and then leaves — you want someone who will act as an active partner in your business.
There are revenue based financing firms that would be more than glad to partner with you to help grow your business. They’re committed to helping you throughout the entire duration of your loan, even after the term sheet has been signed and the transaction has been completed.
First-time business owners can run into lenders who want to hand them a term sheet that was drawn up without the borrower’s consultation. While this may seem like an easy and quick way to get money, these deals usually end up having less-than-ideal results for you.
You should only work with an RBF lender who will work with you to come up with the best terms possible for every party involved. Your needs and the lender’s needs should be accounted for, and a good lender will draft a term sheet that reflects this.
History of Investing
As more SaaS companies are established, RBF increasingly becomes more popular. This means you have more lenders to choose from — both good and bad.
Low-quality lenders can quickly ruin your company, so it’s important to do research on a lender before accepting a deal. Check a lender’s portfolio and contact their previous clients to see what their experience was like. If no red flags appear, you can move forward more confidently.
Dependable and Timely Funding
Managing a business is hard enough without factoring in an unreliable vendor. When you mix in chasing down an investor for the capital they promised, it gets even harder.
While it may sound absurd, this is a situation some founders deal with — which is why it’s important to partner with a reliable lender. Choose a firm that has a strong and positive reputation as well as a track record of providing funding without any complex approval processes and delays.
Choosing the Right Partner for Lasting Growth
As an organization that’s heavily dependent on funding, it’s crucial to have the right lender supporting you — not just financially, but holistically. By doing your due diligence and avoiding accepting deals prematurely, you can ensure you partner with a lender who can act as an investor and a mentor during an important phase in your company’s growth.
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