Revenue Loan Agreement Template for New Zealand
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What is a Revenue Loan Agreement?
This Revenue Loan Agreement template is designed for use in New Zealand financing transactions where traditional debt or equity financing structures may not be optimal. The document is particularly suited for growing businesses with predictable revenue streams seeking flexible financing options. It establishes a loan facility where repayment is structured as a percentage of the borrower's revenue, typically ranging from 2% to 8% of monthly revenue, continuing until a predetermined return cap is reached. The agreement incorporates all necessary elements required under New Zealand law, including compliance with the Contract and Commercial Law Act 2017, Companies Act 1993, and relevant financial services regulations. This financing structure offers advantages over traditional fixed-payment loans by aligning repayment obligations with the borrower's actual business performance.
About the Revenue Loan Agreement
A Revenue Loan Agreement creates a financing arrangement where your loan repayments fluctuate based on your actual business revenue rather than fixed monthly payments. This innovative financing structure allows you to access capital while ensuring your repayment obligations align with your business performance, making it particularly valuable for companies with seasonal or variable revenue streams.
When do you need this document?
You need a Revenue Loan Agreement when your business requires financing but traditional fixed-payment loans create cash flow challenges. This document is essential if you're a growing company seeking working capital for expansion, inventory purchases, or operational needs without the rigid payment schedule of conventional loans. Revenue-based financing is particularly suitable for SaaS companies, subscription businesses, seasonal retailers, and startups with predictable but variable revenue patterns. You'll also need this agreement when lenders prefer revenue-sharing arrangements over traditional security-based lending, or when your business model makes revenue percentage payments more sustainable than fixed monthly instalments.
Key legal considerations
The agreement must clearly define the revenue calculation methodology, including which revenue streams are included and excluded from the percentage calculation. Critical clauses include the revenue share percentage (typically 2-8%), minimum and maximum payment thresholds, and the total return cap that determines when the loan is fully repaid. You need to carefully negotiate reporting requirements, as lenders typically require monthly financial statements and revenue reports to calculate payments. Consider the impact of seasonal revenue fluctuations and ensure the agreement includes provisions for temporary payment deferrals during low-revenue periods. Security arrangements may include personal guarantees from directors or charges over business assets, which require careful consideration of the Personal Property Securities Act 1999 registration requirements.
Legal requirements in New Zealand
Under the Contract and Commercial Law Act 2017, your Revenue Loan Agreement must contain all essential terms including loan amount, revenue share percentage, and repayment calculations to be legally enforceable. The Companies Act 1993 requires proper corporate authorisation, including board resolutions and director signatures for company borrowers. If the agreement includes security over personal property or receivables, you must comply with Personal Property Securities Act 1999 registration requirements within specified timeframes. For larger loans or multiple lenders, consider whether the Credit Contracts and Consumer Finance Act 2003 disclosure requirements apply. The agreement should include New Zealand governing law clauses and specify jurisdiction for dispute resolution. Directors may need to provide personal guarantees, which must comply with specific disclosure and cooling-off period requirements under New Zealand law.
GOVERNING LAW
Applicable law
This Revenue Loan Agreement is drafted to comply with New Zealand law. Key legislation includes:
Companies Act 1993: Relevant for understanding the legal capacity of companies to enter into loan agreements and the requirements for corporate borrowing and security arrangements.
Personal Property Securities Act 1999: Important for registration of security interests if the revenue loan agreement includes any form of security over personal property or receivables.
Credit Contracts and Consumer Finance Act 2003: While primarily focused on consumer lending, this Act may be relevant if the revenue loan agreement involves small businesses or could be classified as a credit contract under NZ law.
Fair Trading Act 1986: Ensures fair trading practices and prohibits misleading or deceptive conduct in business dealings, including financial arrangements.
Financial Markets Conduct Act 2013: Relevant if the revenue loan agreement could be classified as a financial product or if it involves any form of regulated financial service.
Tax Administration Act 1994: Important for understanding tax implications and reporting requirements related to revenue-based lending arrangements.
Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Relevant for compliance with AML/CFT obligations, particularly if the lender is a financial institution or the loan amount is significant.
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