Revenue Based Financing Agreement Template for Singapore

A Revenue Based Financing Agreement is a specialized financial contract that allows you to secure business funding without giving up equity ownership or taking on traditional debt. Under Singapore law, this agreement creates a legal framework where an investor provides capital to your company in exchange for a predetermined percentage of your future revenue until a specified return multiple is achieved.

When do you need this document?

You need this agreement when seeking alternative financing for business growth, expansion, or working capital requirements. It's particularly valuable when traditional bank loans are difficult to obtain due to limited collateral or when you want to avoid equity dilution through venture capital. The document is essential for technology companies, subscription-based businesses, or any revenue-generating enterprise that prefers revenue-sharing over fixed debt payments. You'll also need it when investors are interested in your business model but prefer a revenue-based return structure rather than equity participation or traditional lending arrangements.

Key legal considerations

Several critical legal elements require careful attention in your agreement. The revenue definition clause must clearly specify which revenue streams are included in the calculation, including gross revenue, net revenue, or specific business lines. Payment waterfall provisions determine the priority of revenue sharing payments relative to other business obligations. Default and acceleration clauses outline circumstances that trigger immediate repayment obligations or investor remedies. Information rights and reporting requirements establish your ongoing disclosure obligations to investors. Security and guarantee provisions may require personal or corporate guarantees from key stakeholders. Additionally, the agreement must carefully structure the arrangement to avoid characterization as regulated securities under the Securities and Futures Act or as prohibited moneylending under the Moneylenders Act.

Legal requirements in Singapore

Your Revenue Based Financing Agreement must comply with Singapore's comprehensive financial services regulatory framework. Under the Securities and Futures Act, you must ensure the revenue-based structure doesn't constitute a regulated security requiring prospectus disclosure or licensing requirements. The Companies Act governs your company's legal capacity to enter into such financing arrangements and may require board resolutions or shareholder approvals depending on the transaction size. If you're accepting funds from multiple investors, the arrangement might trigger collective investment scheme regulations under the Securities and Futures Act. The Moneylenders Act requires careful structuring to ensure the arrangement doesn't constitute prohibited moneylending activities. Additionally, MAS guidelines on digital payment tokens and financial services may apply if your business operates in regulated sectors. Tax implications under the Income Tax Act must be considered for both revenue sharing payments and the tax treatment of received funding.