Revenue Based Financing Agreement Template for Australia

A Revenue Based Financing Agreement provides an alternative funding mechanism where you receive capital in exchange for a percentage of your future revenue until a predetermined return is achieved. Unlike traditional loans or equity investments, this structure aligns the financier's return with your business performance, making it particularly attractive for companies with consistent revenue streams but variable cash flows.

When do you need this document?

You'll need this agreement when seeking growth capital without diluting equity ownership or taking on fixed debt obligations. It's particularly valuable for subscription-based businesses, SaaS companies, e-commerce platforms, or service businesses with predictable recurring revenue. The document becomes essential when you want to maintain control of your business while accessing funds for expansion, inventory purchases, marketing campaigns, or working capital needs. Many growing companies use revenue-based financing as a bridge between early-stage funding and traditional bank lending or venture capital.

Key legal considerations

The agreement must clearly define what constitutes "revenue" for calculation purposes, including whether gross or net revenue applies and how to handle refunds, chargebacks, or extraordinary items. Payment obligations should specify the percentage rate, payment frequency, and any minimum payment requirements during low-revenue periods. The return cap provision determines the total amount you'll ultimately pay, typically ranging from 1.2 to 3 times the original funding amount. Security provisions may include personal guarantees from directors, general security agreements, or subordination arrangements with existing creditors. Default clauses should outline specific triggers and remedies, while early repayment terms can provide flexibility to reduce total costs. Reporting obligations typically require regular financial statements and revenue reports to ensure transparency and compliance monitoring.

Legal requirements in Australia

Revenue-based financing agreements must comply with the National Consumer Credit Protection Act 2009 if structured as credit facilities, requiring appropriate licensing and responsible lending obligations. Under the Corporations Act 2001, the arrangement may constitute a financial product requiring compliance with financial services regulations and potential ASIC registration. The Australian Securities and Investments Commission Act 2001 provides consumer protections against unfair contract terms, particularly relevant for small business borrowers. If security interests are created, compliance with the Personal Property Securities Act 2009 is mandatory, including proper registration on the Personal Property Securities Register. The Competition and Consumer Act 2010 applies additional consumer protection provisions, especially regarding unconscionable conduct and misleading representations. Directors providing personal guarantees must receive independent legal advice under various state-based legislation, and proper corporate authorizations are required under the Corporations Act for companies entering these agreements.