Revenue Loan Agreement for India

Revenue Loan Agreement Template for India

A Revenue Loan Agreement is a specialized financing document governed by Indian law that establishes the terms and conditions for a revenue-based financing arrangement. Under this agreement, the borrower receives a loan amount and agrees to repay it through a percentage of their future revenue streams, rather than traditional fixed monthly payments. The document incorporates provisions compliant with Indian contract law, financial regulations, and state-specific lending requirements, while detailing the revenue sharing mechanism, calculation methodologies, reporting requirements, and protections for both lender and borrower.

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What is a Revenue Loan Agreement?

The Revenue Loan Agreement serves as a critical document for businesses seeking alternative financing options in India, particularly suitable for companies with strong revenue streams but potentially variable cash flows. This agreement type has gained prominence as an alternative to traditional debt or equity financing, offering more flexibility in repayment structures. The document comprehensively covers the lending relationship, including the loan amount, revenue share percentage, calculation methods, payment terms, and reporting requirements. Governed by Indian law and compliant with the Indian Contract Act, 1872, along with relevant financial regulations, this agreement type is particularly popular among growth-stage companies and sectors with recurring revenue models. The Revenue Loan Agreement provides lenders with participation in the borrower's success while offering borrowers a more flexible repayment structure aligned with their business performance.

What sections should be included in a Revenue Loan Agreement?

1. Parties: Identifies and defines the parties to the agreement - typically the Lender and the Borrower

2. Background: Provides context for the agreement, including the purpose of the loan and basic business context

3. Definitions: Defines key terms used throughout the agreement, including 'Revenue', 'Payment Period', and calculation methods

4. Loan Amount and Disbursement: Specifies the principal amount and disbursement terms

5. Revenue Share and Repayment: Details the revenue sharing percentage, calculation method, and payment mechanics

6. Repayment Terms: Outlines the repayment schedule, minimum payments, and maximum repayment cap if applicable

7. Information Rights: Specifies the borrower's obligations to provide revenue information and financial statements

8. Representations and Warranties: Standard representations by both parties regarding their capacity and authority

9. Covenants: Ongoing obligations of the borrower, including business operation requirements

10. Events of Default: Lists circumstances that constitute default and corresponding remedies

11. Governing Law and Jurisdiction: Specifies the applicable law and courts for dispute resolution

12. Notices: Details how formal communications between parties should be made

13. Boilerplate Provisions: Standard clauses including assignment, amendments, and severability

What sections are optional to include in a Revenue Loan Agreement?

1. Security: Include when the loan is secured by specific assets or guarantees

2. Intellectual Property Rights: Include when IP is relevant to revenue generation or security

3. Change of Control: Include for borrowers where ownership changes could impact repayment

4. Prepayment Terms: Include if early repayment is allowed with specific terms

5. Revenue Verification Rights: Include for larger loans requiring detailed audit rights

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

7. Tax Provisions: Include detailed tax clauses when complex tax implications exist

8. Multiple Lenders: Include when there are multiple lenders or syndication provisions

9. Subordination: Include when the loan needs to be subordinated to other debt

What schedules should be included in a Revenue Loan Agreement?

1. Schedule 1 - Definitions: Detailed definitions and calculation methodologies

2. Schedule 2 - Revenue Calculation Methodology: Detailed explanation of what constitutes revenue and how it's calculated

3. Schedule 3 - Form of Revenue Report: Template for periodic revenue reporting

4. Schedule 4 - Disbursement Conditions: List of conditions precedent to loan disbursement

5. Schedule 5 - Permitted Liens: List of existing or permitted security interests

6. Schedule 6 - Compliance Certificate: Template for periodic compliance certification

7. Appendix A - Bank Account Details: Payment account information for both parties

8. Appendix B - Initial Financial Projections: Borrower's financial projections used as baseline

9. Appendix C - Key Personnel: List of key personnel if relevant to the business operations

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
Clauses
Relevant Industries

Technology

E-commerce

Software as a Service (SaaS)

Healthcare

Retail

Manufacturing

Professional Services

Media and Entertainment

Financial Services

Education Technology

Consumer Products

Digital Services

Relevant Teams

Legal

Finance

Treasury

Commercial

Risk Management

Compliance

Business Development

Corporate Development

Accounting

Revenue Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Commercial Director

Treasury Manager

Financial Controller

Business Development Manager

Chief Executive Officer

Investment Manager

Risk Manager

Compliance Officer

Corporate Lawyer

Finance Manager

Revenue Manager

Accounts Director

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India. Essential for ensuring the revenue loan agreement meets basic contractual requirements.
Registration Act, 1908: Governs the registration of documents. Relevant for determining whether the revenue loan agreement requires mandatory registration.
Indian Stamp Act, 1899: Determines the stamp duty payable on loan agreements and related documents. Compliance is necessary for document admissibility in court.
Money Lending Acts (State-specific): State-specific regulations governing money lending activities. Important for ensuring compliance with local lending rules and interest rate caps.
Interest Act, 1978: Regulates interest rates and calculation methods. Crucial for structuring the interest provisions in the revenue loan agreement.
The Reserve Bank of India Act, 1934: Central banking regulations that may affect lending terms and conditions, particularly if any party is a regulated financial institution.
Income Tax Act, 1961: Relevant for tax implications of the revenue loan, including TDS requirements and tax treatment of interest payments.
Information Technology Act, 2000: Applicable if the agreement involves electronic execution or digital signatures.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Important for understanding debt recovery mechanisms if the lender is a bank or financial institution.
Foreign Exchange Management Act, 1999: Relevant if the revenue loan agreement involves any foreign parties or cross-border elements.
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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