Revenue Based Financing Agreement for Australia

Revenue Based Financing Agreement Template for Australia

This agreement governs the provision of revenue-based financing under Australian law, where the financier provides capital to the recipient company in exchange for a percentage of future revenue streams. The document outlines the funding amount, revenue share calculations, payment terms, reporting requirements, and compliance obligations. It incorporates specific provisions required under Australian financial services regulations, including consumer protections and securities laws where applicable. The agreement is structured to provide flexibility in funding while maintaining proper safeguards for both parties through detailed revenue definitions, calculation methodologies, and clear default provisions.

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What is a Revenue Based Financing Agreement?

The Revenue Based Financing Agreement is designed for use in the Australian market where companies seek alternative growth financing without diluting equity or taking on traditional debt. This document is particularly suitable for businesses with consistent revenue streams looking to scale operations, fund expansion, or support working capital needs. It establishes a financing relationship where repayment is tied to the company's revenue performance, typically ranging from 2% to 8% of monthly revenue until a predetermined return cap is reached. The agreement comprehensively covers funding mechanics, revenue calculations, payment obligations, and compliance requirements under Australian law, including necessary provisions under the Corporations Act 2001 and other relevant financial services regulations. It's commonly used by scale-ups and established businesses seeking flexible financing solutions that align with their growth trajectory and cash flow patterns.

What sections should be included in a Revenue Based Financing Agreement?

1. Parties: Identifies and defines the parties to the agreement - typically the Financier and the Recipient Company

2. Background: Sets out the context of the agreement, including the purpose of the financing and basic business understanding

3. Definitions and Interpretation: Defines key terms used throughout the agreement, including 'Revenue', 'Collection Period', 'Payment Cap', etc.

4. Funding Amount and Disbursement: Details of the financing amount and how/when it will be provided to the Recipient

5. Revenue Share Calculation: Specifies how the revenue share percentage is calculated and applied

6. Payment Terms: Details of payment frequency, calculation periods, payment methods, and reporting requirements

7. Recipient Covenants: Key promises and obligations of the Recipient, including financial reporting and business conduct

8. Information Rights: Financier's rights to receive financial information and conduct audits

9. Events of Default: Circumstances that constitute default and their consequences

10. Representations and Warranties: Standard business and legal representations by both parties

11. Confidentiality: Provisions for handling confidential information

12. Term and Termination: Duration of the agreement and circumstances for early termination

13. General Provisions: Standard legal provisions including notices, amendments, governing law, etc.

What sections are optional to include in a Revenue Based Financing Agreement?

1. Security Interest: Include when the financing is secured against specific assets or intellectual property

2. Personal Guarantee: Include when personal guarantees are required from directors or shareholders

3. Subordination: Include when there are other creditors and ranking of security needs to be established

4. Intellectual Property Rights: Include for technology companies or when IP is crucial to the business

5. Change of Control: Include when restrictions on ownership changes are required

6. International Payments: Include when parties are in different jurisdictions

7. Key Person Provisions: Include when the business relies heavily on specific individuals

8. Minimum Performance Requirements: Include when specific business performance metrics need to be maintained

What schedules should be included in a Revenue Based Financing Agreement?

1. Schedule 1 - Revenue Share Calculation Methodology: Detailed explanation of revenue definitions and calculation methods

2. Schedule 2 - Form of Revenue Report: Template for regular revenue reporting

3. Schedule 3 - Payment Terms and Instructions: Detailed payment procedures and bank account details

4. Schedule 4 - Initial Business Plan: Recipient's business plan and financial projections

5. Schedule 5 - Excluded Revenue: List of revenue streams excluded from calculations

6. Appendix A - Compliance Certificate: Template for regular compliance certification

7. Appendix B - Draw Down Notice: Form for requesting disbursement of funds

8. Appendix C - Security Documents: If applicable, forms and details of security arrangements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Australia

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Relevant Industries

Technology

Software as a Service (SaaS)

E-commerce

Digital Services

Healthcare Technology

Financial Technology

Professional Services

Subscription-based Businesses

Digital Media

Online Marketplaces

Manufacturing

Retail

Relevant Teams

Legal

Finance

Treasury

Compliance

Corporate Development

Executive Leadership

Risk Management

Operations

Revenue Operations

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Chief Executive Officer

Corporate Counsel

Legal Counsel

Financial Controller

Treasury Manager

Revenue Manager

Compliance Officer

Company Secretary

Business Development Director

Chief Operating Officer

Account Manager

Investment Manager

Risk Manager

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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