Revenue Based Financing Agreement Template for New Zealand

A Revenue Based Financing Agreement provides an alternative funding structure where you receive upfront capital in exchange for sharing a percentage of your future revenue until a predetermined payment cap is reached. Unlike traditional loans or equity investments, this arrangement allows you to access growth capital while maintaining full ownership of your business and avoiding fixed monthly payments that could strain cash flow during slower periods.

When do you need this document?

You need this agreement when seeking growth capital for expansion, product development, or market entry without surrendering equity stakes or taking on restrictive debt terms. This financing model works particularly well for businesses with recurring revenue streams, such as software-as-a-service companies, subscription businesses, e-commerce platforms, or professional service firms with predictable client bases. The agreement is also valuable when traditional bank financing is unavailable due to limited collateral or when venture capital funding would result in excessive dilution of ownership.

Key legal considerations

Your agreement must clearly define the revenue calculation methodology, including which income streams are subject to the revenue share and any exclusions for refunds, chargebacks, or extraordinary items. The payment cap mechanism should specify the total amount to be repaid and any circumstances that might modify this cap. You should carefully negotiate the revenue share percentage, payment frequency, and minimum payment thresholds to ensure the arrangement remains sustainable for your business operations. Default provisions need clear triggers and remedies, while information rights must balance investor transparency needs with your operational privacy. Consider including provisions for early repayment discounts and circumstances that might suspend or modify payment obligations.

Legal requirements in New Zealand

Under the Credit Contracts and Consumer Finance Act 2003, your agreement may be subject to disclosure requirements if it constitutes a credit contract, particularly regarding responsible lending obligations and unfair contract terms provisions. The Financial Markets Conduct Act 2013 governs whether your arrangement qualifies as a financial product or investment scheme, requiring careful structuring to ensure compliance with securities laws and disclosure obligations. Your agreement must comply with the Contract and Commercial Law Act 2017 for enforceability and fair dealing requirements. If the agreement includes security provisions, you must consider registration requirements under the Personal Property Securities Act 1999. Additionally, ensure your revenue reporting and payment mechanisms align with tax obligations under the Income Tax Act 2007 and GST requirements under the Goods and Services Tax Act 1985.