Revenue Based Financing Agreement Template for England and Wales

A Revenue Based Financing Agreement provides an innovative alternative to traditional debt or equity financing, allowing you to raise capital by sharing a percentage of your future revenue with investors. Under England and Wales law, this arrangement offers flexible financing terms without requiring you to give up ownership control or commit to fixed monthly payments, making it particularly attractive for growing businesses with variable but predictable revenue streams.

When do you need this document?

You'll need this agreement when seeking growth capital for your business but want to avoid the restrictions of traditional bank loans or the dilution of equity financing. This financing model works particularly well for software-as-a-service companies, subscription businesses, e-commerce platforms, and other enterprises with recurring revenue models. It's also suitable when you need working capital for expansion, marketing campaigns, or inventory purchases but prefer revenue-based repayments that align with your business cash flow rather than fixed monthly obligations.

Key legal considerations

The agreement must clearly define what constitutes "revenue" for calculation purposes, including whether this covers gross revenue, net revenue, or specific revenue streams. You'll need to establish transparent reporting mechanisms and grant investors appropriate information rights to verify revenue calculations. The document should address events of default, security arrangements if applicable, and any caps on total repayment amounts. Consider including provisions for revenue adjustments due to returns, refunds, or extraordinary circumstances, and ensure the agreement specifies calculation periods and payment timing to avoid disputes.

Legal requirements in England and Wales

Revenue based financing arrangements may fall under Financial Conduct Authority (FCA) regulation depending on the structure and parties involved, particularly if the financing provider is conducting regulated activities under the Financial Services and Markets Act 2000. The agreement must comply with the Consumer Credit Act 1974 if it involves consumer credit elements, though most commercial revenue based financing falls outside this scope. You should ensure compliance with the Unfair Contract Terms Act 1977 regarding limitation clauses and consider whether any consumer protection requirements under the Consumer Rights Act 2015 apply. The document must also include proper disclosure requirements and may need to address anti-money laundering obligations under the Proceeds of Crime Act 2002 and Money Laundering Regulations 2017.