Revenue-Based Lending for
Healthcare Businesses Healthcare Facilities Medical Practices Pharmaceutical Companies Biotechnology Companies Medical Device Manufacturers Healthcare IT Digital Health Companies
Flexible Financing Aligned with Your Revenue Growth
What is Revenue-Based Lending?
Revenue-based lending, also known as royalty-based financing, is a flexible funding option where healthcare providers receive capital in exchange for a percentage of their future revenues. This innovative financing method aligns the repayment schedule with the practice’s revenue flow, ensuring that payments are manageable and directly correlated with income.
Benefits of Revenue-Based Lending
Flexible Repayment Terms
Payments are based on a fixed percentage of your monthly revenue, ensuring that repayments are affordable and in line with your practice’s financial performance.
No Fixed Monthly Payments
Unlike traditional loans with fixed monthly payments, revenue-based lending adjusts to your revenue, providing flexibility during low-income periods.
Growth-Oriented Financing
This type of financing supports growth and expansion by providing capital without the burden of large, fixed repayments, allowing your practice to reinvest in its operations.
Quick Access to Capital
The approval process is generally faster than traditional loans, enabling healthcare providers to access funds quickly to meet urgent financial needs.
The Revenue-Based Lending Process
How Revenue-Based Lending Works?
Understanding the process of revenue-based lending can help you make the best financial decisions for your healthcare practice. Here’s a step-by-step overview:
Revenue Assessment
Submit an application and provide details about your practice's revenue history. The lender assesses your revenue to determine the loan amount and repayment percentage.
Loan Approval
Based on the revenue assessment, the lender approves a loan amount and sets a percentage of future revenue as the repayment amount.
Funds Disbursement
Receive the loan amount in a lump sum, providing immediate capital for your practice's needs.
Repayment
Repay the loan through a percentage of your monthly revenue until the agreed amount is fully repaid. Payments vary with your income, making it easier to manage cash flow.
Understanding the Difference
Revenue-Based Lending vs Traditional Financing
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REVENUE-BASED LENDING
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TRADITIONNAL FINANCING
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REPAYMENT TERMS
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Based on a percentage of monthly revenue
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Fixed monthly payments
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FLEXIBILITY
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High, adjusts with revenue fluctuations
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Low, fixed schedule regardless of revenue
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Faster approval process
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Longer approval process
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IMPACT ON CASH-FLOW
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Lower impact during low-revenue periods
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High impact due to fixed payments
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USE CASES
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Growth, expansion, managing cash flow
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Large purchases, long-term investments
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Revenue-Based Lending
Frequently Asked Questions
Revenue-based lending is suitable for healthcare providers of all sizes, including medical practices, clinics, hospitals, and other healthcare-related businesses. It is particularly beneficial for sectors such as biotechnology, pharmaceuticals, medical devices, diagnostics, healthcare IT, and life sciences.
The approval process for revenue-based lending is generally faster than traditional loans. Funds can typically be accessed within a few days to a couple of weeks, depending on the lender’s process and the complexity of your revenue assessment.
The repayment amount is a fixed percentage of your monthly revenue, which means it varies with your income. This ensures that repayments are affordable and aligned with your practice’s financial performance.
While revenue-based lending offers flexibility, the main risk is that if your revenue decreases significantly, you may still be obligated to repay the agreed percentage, impacting your cash flow. It’s crucial to understand the terms and ensure they align with your revenue projections.
Traditional loans typically involve fixed monthly payments and may require collateral. In contrast, revenue-based lending involves repayments based on a percentage of monthly revenue, offering more flexibility and aligning with your income fluctuations.
No, revenue-based lending does not dilute ownership. Unlike equity financing, where you give up a portion of your ownership in exchange for capital, revenue-based lending involves repaying the lender through a percentage of future revenue, allowing you to maintain full control and ownership of your business.
Yes, revenue-based lending can be combined with other financing options such as asset-based lending, invoice factoring, or traditional loans. Combining different solutions can provide a comprehensive approach to meeting your healthcare practice’s financial needs.
For more information on how revenue-based lending can benefit your healthcare business, contact FinMed Capital today. Our experts are here to provide personalized financial solutions tailored to your needs.
For more information on how asset-based lending can benefit your healthcare practice, contact FinMed Capital today. Our experts are here to provide personalized financial solutions tailored to your needs.
Questions?
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