Velocity: Empowering Business Expansion with Revenue-Based Financing

Anubhav Dwivedi -

Velocity: Revenue-Based Financing

  • In today’s fast-paced business world, companies need quick and easy access to capital to grow and expand. Traditional bank loans often come with lengthy approval processes, strict collateral requirements, and rigid repayment structures. This is where revenue-based financing (RBF) steps in as a flexible and efficient alternative for businesses, especially for startups and small to medium-sized enterprises (SMEs). One such platform that specializes in this is Velocity.

In this article, we will take a detailed look at Velocity, how revenue-based financing works, its benefits, the process, and important FAQs.

What is Velocity?

  • Velocity is a financial platform that provides revenue-based financing to businesses. Unlike traditional bank loans, Velocity offers a more flexible funding option where repayment is tied to the business's future revenue. This means that companies can borrow money and repay a percentage of their earnings, rather than committing to fixed monthly payments.
  • Velocity is particularly useful for digital-first businesses like eCommerce platforms, D2C (Direct-to-Consumer) brands, SaaS (Software as a Service) companies, and subscription-based services.

How Does Revenue-Based Financing (RBF) Work?

  • In revenue-based financing, companies receive funding in exchange for a percentage of their future revenue. The repayment is made from a portion of the revenue generated by the business. This makes RBF a highly flexible option, especially for companies with fluctuating incomes.

Here’s a step-by-step explanation of how revenue-based financing through Velocity works:

  • Application: A business applies for funding with Velocity by sharing its financial data, including monthly sales and projected growth. The application process is quick and can be done online.
  • Funding Proposal: Based on the revenue and financial health of the company, Velocity proposes a funding amount. This amount can range from a few lakhs to several crores, depending on the company's sales performance.
  • Revenue Share Agreement: The business agrees to repay Velocity by giving a percentage of its monthly revenue. The percentage is agreed upon during the contract, typically ranging from 2% to 10% of monthly sales.
  • Repayment Flexibility: Since repayment is based on revenue, businesses pay more when sales are high and less when sales are low. There is no fixed monthly amount, and repayment continues until the agreed loan amount, plus fees, is repaid.
  • No Collateral or Equity: Unlike traditional loans, Velocity does not require collateral, and businesses do not have to give up any ownership (equity) in their company.

Key Features of Velocity's Revenue-Based Financing:

  • Fast Approvals: Velocity provides quick approvals for funding, typically within a few days, making it a great option for businesses needing immediate capital.
  • Flexible Repayment: Repayment is directly tied to the company’s revenue, which means that businesses only pay more when they earn more, reducing the burden during slow months.
  • No Equity Dilution: Unlike venture capital or angel investment, businesses do not have to give away any ownership or equity in exchange for funds.
  • No Collateral Required: Velocity’s revenue-based financing does not require any assets or personal guarantees, making it accessible to startups and companies without significant collateral.
  • Clear Terms: The repayment terms are clear and easy to understand, with no hidden fees or penalties.

Benefits of Using Velocity for Revenue-Based Financing:

  • Growth without Debt Pressure: Since repayment is based on revenue, businesses don’t feel the pressure of having to meet fixed loan payments. This allows for smoother financial management during periods of slow sales.
  • Quick Access to Capital: Velocity’s funding process is fast, giving businesses access to funds much quicker than traditional bank loans.
  • Customizable Repayment Plans: Velocity’s flexible repayment system adjusts according to the business’s cash flow. This flexibility makes it easier for companies to manage their finances and grow without financial stress.
  • No Equity Loss: For entrepreneurs who want to maintain control over their business, revenue-based financing is a great alternative to equity financing, which often requires giving up a portion of ownership.
  • Tailored for Digital-First Businesses: Velocity’s model is especially suitable for online businesses that generate consistent revenue through platforms like eCommerce or SaaS subscriptions.

The Process of Getting Revenue-Based Financing from Velocity:

The entire process of getting revenue-based financing from Velocity is designed to be simple and hassle-free. Here’s a breakdown of the process:

  • Initial Application: Businesses can apply online by sharing basic details about their company, including monthly revenue, business model, and projected growth.
  • Review of Financials: Velocity evaluates the company’s revenue data to assess eligibility. This usually involves looking at the company’s monthly revenue for the last few months.
  • Funding Offer: If the business meets the criteria, Velocity will present a funding offer. This offer includes the total amount of funding, the percentage of revenue to be shared, and the total amount to be repaid.
  • Contract Signing: After agreeing to the terms, the business signs the contract, and funds are disbursed to the business account.
  • Revenue Sharing: The business repays Velocity by sharing a percentage of its monthly revenue until the full repayment is made.

Is Revenue-Based Financing Right for Your Business?

Revenue-based financing is ideal for companies that:

  • Have consistent monthly revenue.
  • Want flexible repayment terms based on sales.
  • Do not want to give up ownership or equity.
  • Need quick access to capital without going through lengthy bank processes.

However, businesses with highly unpredictable revenue or those looking for long-term financing may need to consider other options.

Conclusion:

  • Velocity’s revenue-based financing offers a flexible, fast, and efficient solution for businesses needing capital without the constraints of traditional loans. With no collateral or equity requirements and a repayment model based on revenue, it’s an excellent option for digital-first businesses and startups. The process is simple, transparent, and can significantly help businesses grow without added financial stress.
  • If you’re looking for a financing solution that adapts to your business's growth, Velocity might be the right choice for you.

Frequently Asked Questions:

How much funding can a business get from Velocity?

  • The amount of funding depends on the company's monthly revenue and financial health. Velocity typically offers financing amounts ranging from Rs. 10 lakhs to Rs. 5 crores.

How quickly can a business get funding through Velocity?

  • Velocity offers a fast approval process, and businesses can receive funds within 3 to 5 business days after submitting their application and financial data.

What percentage of revenue does Velocity take?

  • The percentage of revenue that Velocity takes for repayment varies but typically ranges from 2% to 10%. The exact percentage is decided based on the funding amount and the company’s revenue.

Is collateral required for revenue-based financing from Velocity?

  • No, Velocity does not require any collateral or personal guarantees. It offers unsecured funding based on the company’s revenue.

How long does it take to repay the funding?

  • Repayment duration depends on the business's monthly revenue. The faster the business grows and generates revenue, the quicker the loan is repaid. Typically, repayment can take anywhere from 6 months to 2 years.

What happens if the business revenue drops?

  • One of the key benefits of Velocity’s revenue-based financing is that repayment is based on revenue. If revenue drops, the business will pay a lower amount, easing the financial burden during slow periods.

Can startups apply for Velocity’s revenue-based financing?

  • Yes, startups with consistent monthly revenue can apply for funding through Velocity. However, businesses without regular income may not be eligible.

Are there any hidden fees with Velocity’s revenue-based financing?

  • No, Velocity has clear and transparent terms, and there are no hidden fees or charges.

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