Revenue Based Financing Agreement Template for Nigeria

The Revenue Based Financing Agreement serves as a crucial alternative financing instrument in the Nigerian market, particularly suitable for growing businesses seeking flexible funding options outside traditional debt or equity financing. This document is typically used when a company needs growth capital but prefers to align repayment with its revenue performance rather than committing to fixed monthly payments or diluting equity. The agreement details the financing amount, revenue share percentage, payment mechanics, reporting requirements, and various protections required under Nigerian law. It incorporates provisions compliant with Nigerian financial regulations while addressing practical aspects such as revenue calculations, payment mechanisms, and default scenarios. This type of financing has gained popularity among technology-enabled businesses and scaling companies that have predictable revenue streams but may not fit traditional banking criteria.

1. Parties: Identification of the financing provider and the recipient company, including their registration details and addresses

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

3. Definitions: Definitions of key terms used throughout the agreement, including 'Revenue', 'Payment Period', 'Percentage Rate', etc.

4. Financing Amount: Details of the principal amount being provided and any tranches or conditions for disbursement

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

6. Payment Terms: Payment schedule, mechanism, currency, and process for revenue share payments

7. Revenue Reporting: Requirements and timing for revenue reporting, including format and verification procedures

8. Representations and Warranties: Standard and specific representations and warranties from both parties

9. Covenants: Ongoing obligations of the company, including financial covenants and operational requirements

10. Information Rights: Rights of the financing provider to receive financial and operational information

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

12. Termination: Conditions and process for early termination or buyout options

13. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction for disputes

14. Miscellaneous: Standard boilerplate provisions including notices, amendments, and assignment