“During Diwali this (2021) year, there is an estimated business of about Rs 1.25 lakh crore (trillion) in the entire country, which is a record figure in the last decade,” said CAIT National President B C Bhartia and Secretary General Praveen Khandelwal. “In Delhi alone, this business was about Rs 25,000 crore.” A news article from Business Standard that had reflected the stats of the festive season sale and yet demand.
As evidenced by the market research and data, there is no need to comment on reflecting market growth and opportunities for online businesses. Significantly, festival seasons bring glory to businesses for nearly every consumer-focused enterprise either a Micro, Small, or Medium Enterprise. So, what’s the only barrier that restricts establishing the brand and earning the best possible is insufficient funds. Entrepreneurs battle to avail funds to unravel their cash inflow and outflow irregularity. The few causes that always prevent companies from entering the surging market are excessive demands for merchandise products, entry restricted to monetary assets, and credit dues of existing providers. Subsequently, this results in a scenario, where companies get discouraged from expanding their manufacturing capacity and rising their enterprise operations.
Thankfully, with the availability of funding options such as Revenue-Based-Financing (RBF), entrepreneurs can now access capital with quick funding options and without including their present debts based on future potential of the brand.
Revenue-based financing is a type of loan that an enterprise agrees to pay back over time to the financier by promising a part of its future revenue. RBF has many benefits such as no collateral required, retaining more ownership and control, cheaper than equity, and shared alignment towards growth, on top of all these benefits one benefit which makes it a unique funding option is a faster funding timeline. Banks and venture capitalists take more than a month to secure a deal. Since RBF investors do not require companies or enterprises with large equity to exist or achieve hyper-growth, Automation enabled RBF players like VedFin can provide funding within a week.
The above benefits collectively work out best for enterprise owners who want to get funding without raising their existing liabilities. As the festive season is knocking on the door, it’s the most effective time to seek additional capital and put it together to shoulder the seasonal demand.
How Does Revenue-Based Financing Work?
Revenue-based financing is really beneficial for a growing organization because it’s non-dilutive, and in our case works quickly. There are different ways to access revenue-based financing and you can use it in different ways and for different reasons. Mainly, it works like this, firstly a company secures a loan from a lender for a specific purpose, then the loan is repaid by a fixed percentage of the company’s revenue. Thus the loan has a variable lifespan, depending on how much revenue the company generates month by month, the loan may take more or less time to repay.
RBF is an excellent financing option for the development of online stores. A huge benefit of it is the simple and quick process, which at VedFin takes a couple of minutes, with easy paperwork and a safe and flexible repayment system.