How To Access Revenue Based Financing & SAAS Finance Solutions In Canada

 

Royalty Based Financing Solutions For Saas Companies In Canada

 

Revenue-based financing is a new alternative to more conventional investments in the past decade, which tend to be equity financing based or debt - a solid solution and good fit for start ups as well.

 

 

REVENUE BASED FINANCING - THE BETTER OPTION FOR THE SAAS COMPANY? 

 

Recurring revenue finance lets founders raise funds for early stage companies for their growth initiatives without diluting their shares or providing collateral after their initial investment to start the business  - Monthly recurring revenue from gross revenues repays the loan.  Revenue based options are often viewed as better solutions than venture capital or bank financing simply because ownership stake remains intact :

 

1. Collateral is not required / No Personal Guarantees

2. Repayment is a flexible way to provide capital for a business - and unlimited funding is possible based on your revenues geared to monthly payments - Royalty financing is 'non dilutive'

3. Access to capital can be achieved in weeks - not months - your funding needs are aligned to your growth projections and loans are finished when the predetermined amount has been repaid on the initial loan amount based on your firms ' MRR ' - monthly recurring revenue.

 

Those are 3 great reasons to choose revenue based financing. Revenue  based financing is a powerful lending option. ' RBF ' offers flexibility and enables businesses to grow. More and more firms are turning to alternative financing solutions.

 

Revenue-based financiers analyze a business's past and future, both digital marketing spend and monthly sales revenue to determine whether or not they will provide a loan. Revenue-based financiers will ask for data about your business to predict its growth and make funding decisions - allowing owners to maintain full control


T hat allows you to repay the amount depending on your monthly revenue. Revenue-based financing is a loan with no interest, equity dilution or collateral required.

The revenue-based financing model provides an alternative to traditional bank loans, by only requiring a company to pay back during periods in which they generate revenues.


If you get a part of your future revenue upfront, then this is an opportunity for fintech owners to have more flexibility in using that money. A revenue-based financier can provide businesses with upfront funding, which is repaid based on the business's sales.

There are many different ways to raise capital for your SAAS ( software as a service), but each option comes with a caveat.

 

THE ALTERNATIVE TO  VENTURE CAPITAL / DEBT FINANCING

Angel investors and VC funds are used for startups that need heavy investment. Angel investors and VC funds are usually difficult to get funding from as they seek at least 10x return on their investments.

Under Saas financing businesses c use committed sales revenues as collateral for financing. Most experts agree it is better to grow your company and reach milestones before looking for VC funding. 

Entering the revenue-based financing space is a big step for any company, but one that can be very rewarding. Saas funding provides your company with the tools and metrics to help you track your business growth  - thereby giving any future investors or lenders more confidence in investing or lending.

 

HOW TO EVALUATE YOUR SAAS FUNDING / REVENUE-BASED FINANCE OPTIONS

 

Consider the effects of loans carefully; don’t just look at how much you can pay back, but also think about your future growth. Think carefully about how the loan is structured as it will affect your company’s future growth.

1. To avoid a severe cash crunch, your company's debt should not exceed 33% of annual revenue.

 

2. When considering repayment ability, consider how your company's growth can cover the SAAS funding via your strong gross margins associated with Saas

 

3. When a company is looking for funding, it may be asked to provide warrants. Warrants are the right to buy your company's equity in the future at a price agreed today.

 

4. Future options are important to keep in mind while evaluating loans. Ensure that lending terms keep your future options open.

 

Revenue-based funding provides borrowers with control of the business and increases the distance between borrowers in different stages of funding.

 

 

CONCLUSION- UNDERSTANDING THE REVENUE BASED FINANCING INVESTMENT VIA GROWTH FUNDING & ' VENTURE DEBT '

 

Revenue-based financing is a way to grow your business that has been proven successful for many businesses. The way to grow your business is by partnering with the right Revenue-based financier. Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian Business Financing advisor who can assist you with your funding needs for growth capital and entering new markets while taking your company to the next level of business success.

 

FAQ: FREQUENTLY ASKED QUESTIONS / MORE INFORMATION

 How does revenue-based financing work? 

Revenue-based financing is a way that firms can raise capital by pledging a percentage of future ongoing revenues in exchange for money borrowed.

Is Revenue Based financing a loan?

A principal investment amount is agreed upon by both the borrower and lender. Loans are paid back with a fixed percentage of monthly revenue.

 

 

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.


Click here for the business finance track record of 7 Park Avenue Financial 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

<H1>Revenue Based Financing Saas Finance | 7 Park Avenue Financial</H1>

Software Leasing And Software Financing Solutions: Saas Finance 101!

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Benefits of Lease Financing In Your Software Acquisition & Subscription Requirements

Software leasing and software finance solutions for your investments into applications also come with often a significant expense. Not only the cost of those solutions but the maintenance and support and updates around those products bring additional cost. The good news? Software can be leased and financed through the right software finance company. Discover why thousands of firms are financing software.

The reality is that many of the same similarities business owners recognize around equipment lease and finance come with the same benefits when you finance applications. The key? Using the right firm, as many firms are unfamiliar and therefore risk-averse to financing this business asset - an 'intangible'. A Leased software finance solution funds that intangible.



The irony? Simply that contrary to popular opinion software as an asset often has more value than a depreciating asset. Naturally, your business doesn't 'own' the applications you are financing and the financing is simply a mechanism to pay for your investment.


Did you know that purchasing business software and financing that purchase comes with options? The rise of a software subscription model with regular monthly payments has become a staple and an alternative to a one-time costly purchase. Leading experts such as THE GARTNER GROUP has predicted a massive rise for years now in subscription-based software purchases.

As for the financing of the software purchase consider this :

Bundling of associated services with your purchase can be costly - ie training, migrations, report design, etc and interest rates have never been lower

The multi-year discount option saves money and locks your company in from future price increases

Software financing is predictable cash flow management that avoids unnecessary surprise in the capital budget process - financing technology needs preserves bank and other business lines of credit


Other key points? The right to use the software comes with no right to the intellectual property surrounding the developer's rights in the code. A good example - Microsoft's Excel package. We use these spreadsheets at home or in the office but Microsoft of course owns it.


Industry statistics for equipment leasing in North America tell us that over 80% of companies in all industries utilize lease financing to acquire assets. But most business owners and financial managers think of lease finance as acquiring hard assets so they have not considered the option of lease application software, cloud software, etc.

New clients at 7 Park Avenue Financial can be forgiven for not considering leasing their software needs until we have explained the benefits! If you are looking for a financing partner with expertise in financing technology and software we have the solutions you require based on our multi-year experience. Financing software is the perfect trade-off versus a significant cash outlay, and in almost all cases bundling of additional maintenance, upgrades and training can also be included. That is true technology financing.


Solutions your firm requires in the software area might come from one or a variety of vendors. Depending on your specific financing needs those multiple solutions can come from 1, or several vendors either in Canada of the U.S. Typical terms for this ' niche financing' can be anywhere from 2-5 years. Typical requirements from your firm might be a detailed overview or quote from your vendor, and normal business application information, financial information, etc.

That allows for a speedy approval process. While larger established firms might not necessarily consider financing technology needs SME COMMERCIAL FINANCE needs typically revolve around preserving cash and not using daily operating cash for longer-term investments. The pro's call that ' matching', namely financing long term investments with financing that matches the ' useful life ' of your investment in such areas as r&d, technology infrastructure, etc.


In past times lenders struggled with how to collateralize and register security around the financing of the software - but that is now easily handled as lenders register a simply PPSA' under the Personal Property Security Act.

The heart of our financing issue here is the true value of the software to your business. You run your business on it - i.e. sales management programs, office software, manufacturing software, etc. Lease payments are made since these assets are indispensable to the value and ongoing concern of the business. Unless companies are liquidated in total bankruptcy most lessors and finance firms recover fully on their software leasing - Source - Journal of Equipment Leasing



Also key to the software financing issue is that many software firms offer maintenance, support, and updates around their product. This enhances the lender's asset as it is used for longer lengths of time, and often constantly upgraded. Quite frankly it becomes less obsolete than computer hardware!

Many software lessors and lenders also finance the service and maintenance contracts associated with their customer’s software acquisition. Your software finance needs can typically be easily bundled into your computer hardware financing acquisition.

Given that software providers prefer upfront payment, allowing them to more quickly recoup their development costs, there are cash flow advantages to bundling all your IT needs into one master agreement. That multi-year financing option can easily translate into higher discounts on your total software purchases- always a factor in multi-year prepayment scenarios.

SOFTWARE AS A SERVICE ( SAAS ) FINANCING - SAAS FINANCE 101!

As software had become an essential product/service in today's environment even low priced office solutions as well as larger enterprise offerings can now be financed in a manner to achieve better costs and preserve the working capital required to purchase your software needs.

Industry experts tell us that the enterprise business software market is growing substantially. Monthly payment options are more important than ever to maximize your ' IT ' ( ' information technology') budget. Although many purchasers view their software costs as a monthly expense the reality is that these solutions are often sold on a bundled one to three-year contract, which may often include maintenance and upgrades. Financing in advance can often achieve significant savings. Note that we are mostly talking about application software solutions, not customized development.

How Does Leasing Software and Financing a Saas Contract Aid In Cash Flow Preservation? Software as a Service Revenue Financing Explained!

It is important to consider large volume purchases of software versus the needs of smaller firms. A typical cost in a larger firm might be 100$ per ' seat ' the term commonly used in the industry for one unit. Some firms might also require a third party to implement the solution. Those costs add up and the concept of software contract financing can allow your firm to maintain technology costs within budget. The idea of a manageable monthly payment withing your capital budget versus a large cash flow outlay is appealing to any business owner or financial manager! The right SAAS Funder / SAAS Lender makes that happen.



In summary, software lease financing is available and should be considered by every business owner in the same context as a capital equipment finance transaction. The computer hardware industry has grown with leasing, and the software industry is doing that also.

The same considerations an owner gives to lease vs. buy apply to a software finance acquisition. Subscription software financing allows you to turn an annual expenditure into a manageable monthly payment. Other types of software that are commonly financed are ERP software and Human Resource management applications, legal law firm software, as well as the traditional accounting and payroll types of solutions.


Speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success who will help you ensure your software acquisitions can be adequately financed under the best rates, terms and structures that make sense for your company. We can make subscription-based software financing and all your technology funding requirements simple!



7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.7parkavenuefinancial.com

Click Here For 7 PARK AVENUE FINANCIAL website !



7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.



Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced

business financing consultant

.

Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.


Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.






Stan Prokop
7 Park Avenue Financial/Copyright/2020