Revenue Based Financing Agreement for India

Revenue Based Financing Agreement Template for India

A comprehensive financing agreement governed by Indian law that establishes a revenue-based funding arrangement between an investor and a company. The agreement structures the provision of capital in exchange for a percentage of the company's future revenue until a predetermined amount is repaid. It includes detailed provisions for revenue calculation, payment mechanisms, reporting requirements, and protections for both parties. The document incorporates specific Indian regulatory requirements, including compliance with RBI guidelines, Companies Act provisions, and applicable securities regulations.

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What is a Revenue Based Financing Agreement?

The Revenue Based Financing Agreement is designed for businesses seeking growth capital through alternative financing structures in the Indian market. This document is particularly relevant when companies want to avoid equity dilution while securing funding based on their revenue potential. 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 includes comprehensive provisions for revenue calculation, payment mechanics, reporting obligations, and default scenarios, all structured within the Indian legal framework and compliant with regulations including the Companies Act, 2013, and RBI guidelines. This financing model is particularly suitable for companies with strong revenue streams and growth potential but who may not qualify for traditional bank financing or prefer not to pursue equity funding.

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

1. Parties: Identification of the financing party (investor) and the recipient company, including their registration details and addresses

2. Background: Context of the financing arrangement, brief description of the company's business, and purpose of the funding

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Revenue', 'Payment Period', 'Total Payment Cap', etc.

4. Amount and Purpose: Details of the financing amount, disbursement terms, and specified use of funds

5. Revenue Share Calculation: Formula and methodology for calculating the revenue share payments, including the percentage and basis of calculation

6. Payment Terms: Payment schedule, method of payment, currency, and payment mechanics

7. Minimum Payments: Any guaranteed minimum payment requirements and their timing

8. Maximum Payment Cap: Total maximum amount payable including the invested amount and return

9. Information Rights: Company's obligations to provide financial information and revenue reports

10. Representations and Warranties: Standard and specific representations by both parties

11. Covenants: Ongoing obligations of the company regarding business operations and financial management

12. Events of Default: Circumstances constituting default and consequences thereof

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

14. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction over disputes

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

1. Security: Required when the financing is secured by specific assets or guarantees

2. Parent Company Guarantee: Needed when a parent company guarantee is required for the financing

3. Change of Control: Provisions dealing with change in ownership or control of the company

4. Prepayment Terms: Include when early payment options are allowed, with associated terms

5. International Payments: Required for cross-border financing arrangements

6. Intellectual Property Rights: Needed when IP forms a significant part of the company's value proposition

7. Additional Funding Rights: Optional provisions for future funding arrangements or right of first refusal

8. Board Observer Rights: Include when investor requires board observation rights

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

1. Schedule 1 - Revenue Calculation Methodology: Detailed methodology for revenue calculation, including inclusions and exclusions

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

3. Schedule 3 - Payment Mechanics: Detailed process for making and reconciling payments

4. Schedule 4 - Conditions Precedent: List of conditions to be satisfied before disbursement

5. Schedule 5 - Company Information: Detailed company information including corporate structure and key contracts

6. Appendix A - Initial Financial Projections: Company's financial projections used as basis for the agreement

7. Appendix B - Permitted Uses of Funds: Detailed list of approved uses for the financing amount

8. Appendix C - Security Documents: If applicable, list and copies of security documents

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

India

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions
Relevant Industries

Technology and Software

E-commerce

Digital Services

Healthcare

Manufacturing

Retail

Financial Services

Education Technology

Consumer Products

Business Services

Media and Entertainment

Telecommunications

Logistics and Supply Chain

Food and Beverage

Relevant Teams

Legal

Finance

Treasury

Compliance

Corporate Development

Risk Management

Operations

Strategic Planning

Executive Leadership

Investment

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Company Secretary

Chief Executive Officer

Treasury Manager

Financial Controller

Business Development Director

Investment Manager

Risk Manager

Compliance Officer

Corporate Finance Manager

Managing Director

Operations Director

Strategic Planning 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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