SMBs Choose Fast and Flexible Revenue-Based Financing to Access Working Capital As Needed

In a Nutshell: Small business owners shouldn’t have to risk their personal credit to pursue their ambitions. But that’s what can happen when an up-and-coming business needs cash too quickly for a bank to supply it or falls short of government thresholds. Through its Flex Line and Business Card, Revenued provides an alternative financing model where businesses gain upfront cash in return for a share of their future revenue. Flexible, short-term revenue-based financing from Revenued helps small businesses take advantage of every opportunity.

They say you’ve got to spend money to make money. If you ask us, nowhere is that truer than in small business. SMB owners who keep their eyes on the prize need cash on hand to invest in the next market-busting, revenue-generating opportunity.

But that’s easier said than done if you want to keep your kid’s college fund intact. Many, if not most, small businesses that are past the smallest stage find getting credit surprisingly challenging.

Poor personal credit stymies some who ignore reasonable advice to avoid risking their household’s financial reputation. On the business credit side, many SMBs simply lack the credit history and credit score to qualify for the kind of loan anyone would want.

Some businesses experience revenue and cash flow fluctuations that scare off creditors. Some lack collateral when they need it to secure what they require. Others simply prefer not to deal with the bureaucracy and high thresholds of the traditional marketplace unless they have to.

It’s one thing when you have a neighbor down the street who can hook you up with a special deal. It’s another when it’s you against the world, and everybody in the banking industry has better things to do than deal with you.

That’s where Revenued comes in. Instead of dealing with banks, small businesses from a few thousand to millions in revenue turn to Revenued’s Flex Line and Business Card for quick and easy cash upfront in return for selling a share of their near-term future earnings. Revenued itself describes this as them purchasing a businesses future receivables – and making it clear that this is not a credit card or a loan.

It’s similar to a merchant cash advance, but payments to Revenued adjust based on cash flow, with transparent, predetermined factor rates rather than a factor rate that creates a fixed cost on the total sum like an MCA.

Chief Revenue Officer Jake Lerner said the result is like a line of credit with a built-in payment tool and repayment terms tied to actual business revenue instead of fixed.

“We’re purchasing a share of a business’s future sales based on its prior history,” Lerner said. “Our AI model parses bank transactions to determine real revenue, pass-through revenue, and other essential metrics that differentiate how we underwrite.”

Dealing with banks from the SMB perspective can be an exercise in bureaucratic frustration. You’d think there’d be a better way by now to get a handle on a business’s reputation and creditworthiness than seemingly rewriting its credit history from scratch again and again.

Yet that’s how a bank’s lengthy application process, limited repayment flexibility, and tendency to look for reasons to say no leave SMB owners feeling. Not that the money would necessarily be there when needed.

Say a sudden opportunity materializes to purchase a product, and the business intends to resell it for twice the original price. That’s not a time to apply for an SBA loan, which can be a two-month process. Lerner said the Revenued team strives for the opposite of that.

“Our automated system underwrites and monitors cash flow through soft pulls on business information that don’t affect your personal credit,” Lerner said. “We match you up with industry data and use your bank transactions to forecast how much capital we can have outstanding with you and for how long.”

The application, which includes connecting to your bank via the widely used Plaid data network, takes as little as five minutes. The platform and team can produce a credit decision as soon as a business day.

Lerner said Revenued’s emphasis on speed produces complex scenarios, such as when firms access capital from their Flex Line while waiting for the SBA to act on their application.

“They take the money from us and let the SBA pay us off when it’s finally ready to finance them,” Lerner said. “But this way, they didn’t miss out on the opportunity to buy those new trucks or acquire those materials at a discount.”

Lerner said the nature of the Flex Line to act as a line of credit differentiates it from a merchant cash advance. Say a field service business needs $10,000 to tide it over but needs $5,000 the first week before then getting paid.

The merchant cash advance has them on the hook for the entire $10,000 upfront, whereas revenue-based financing from Revenued lets the business portion that out.

“You could take $5,000 for one job and then draw down once more next week when you need materials again,” Lerner said.

Deep prepayment discounts are also a hallmark of Revenued Flex Lines. In contrast to Revenued products, merchant cash advances tie payments to sales and revenues with a fixed structure.

“Most MCAs will say you’re paying half the total cost, no matter what, in the first 30 days — and then the first 60 days, the first 90 days, and it scales up,” Lerner said. “But you don’t have this incredibly deep discount where you’re paying 1/20 of the total cost if you pay it off in a week or two weeks or a month.”

Revenued flex lines start at $5,000 and can scale to $500,000. The business has plans to grow with its constituency and eventually offer million-dollar share purchases.

The card part of the Flex Line and Business Card makes using these lines a snap, and although it functions similarly, the underlying asset is not a credit card.

“It’s actually a just-in-time, or instantly funded, prepaid debit card,” Lerner said.

In this context, just in time means the instrument functions as a credit card in the sense that a swiping or tapping experience starts the process. Revenued’s back-end software provider receives and validates the ping and instantly funds the card.

Payment clears for that exact amount. Experientially, it functions like the rail system pinging the bank that you have credit available. Ultimately, however, how you use the card is up to you.

We must note again that Revenued’s service provides for the purchase of future receivables and is not a credit card or a loan.

If cash is needed for your business, funds can be drawn from your Flex Line and then withdrawn as cash. When swiping is more convenient, your funds may be used by swiping your Revenued Business Card.

A value-add is that Revenued reports transactions to Dun & Bradstreet — a major business credit bureau akin to Equifax, Experian, and TransUnion, the three major U.S. consumer credit bureaus. This, in turn, can help boost your business credit score with the Small Business Financial Exchange (SBFE).

“Not only do we leave your personal credit alone, we can actually help you build your business credit,” Lerner said.

The Flex Line and Business Card provide an excellent financial stepping stone for financial success from an industry-agnostic small-business facilitator.

Think of an entrepreneur with a dream and the talent and commitment to carry it out. That individual may have a credit score of 620 or below — in the subprime category, in other words. With a history of two years in business, there isn’t a paper trail of three profitable tax returns to secure an SBA loan or some other form of traditional financing.

That’s a scenario that will cause a traditional lender to quickly turn away in favor of greener pastures. A company like that may be a blip on the radar for a conventional lender, but it’s a prime candidate for partnership with Revenued.

“You’re growing your personal credit because you’re not spreading yourself too thin,” Lerner said. “If we were a typical credit card, they’d be overleveraged with a credit score about to drop. We don’t do that — we actually only report positive pay history to help businesses build credit.”

Partnerships don’t end with payback periods. Instead, the Revenued team considers all relationships ongoing, with the goal of growing alongside businesses that tap into ever-larger potential by sharing ever-greater amounts of future revenue.

That means providing granular consultation — another term for it is education — to customers and prospects about scenarios where revenue-based financing from Revenued can work and where it most assuredly doesn’t.

Longer-term relationships evolve out of the trust an impartial relationship with a dedicated Revenued account professional can bring. One longtime client came to Revenued after repeatedly advancing his business money from his personal funds.

“He loses about a half a factor point to a point, so up to 1% cost of capital,” Lerner said. “But now he can sleep at night because his IRA’s not at stake.”