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Revenue Based Financing Agreement for the United Kingdom

Revenue Based Financing Agreement Template for England and Wales

A Revenue Based Financing Agreement under English and Welsh law is a legal contract where financing is provided in exchange for a percentage of the recipient's future revenue. This alternative financing method differs from traditional loans as repayments flex with revenue performance rather than following fixed schedules. The agreement details the calculation methodology, payment terms, reporting requirements, and protections for both parties, all governed by English and Welsh law.

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What is a Revenue Based Financing Agreement?

A Revenue Based Financing Agreement is increasingly used by growing businesses seeking alternative financing solutions without diluting equity or taking on traditional debt. This agreement, governed by English and Welsh law, establishes the terms under which financing is provided in exchange for a percentage of future revenue. It's particularly suitable for companies with predictable revenue streams but who may not qualify for or desire traditional bank financing. The document covers crucial elements including revenue calculations, payment mechanisms, information rights, and default provisions, while ensuring compliance with UK financial services regulations.

What sections should be included in a Revenue Based Financing Agreement?

1. Parties: Identification and details of the financing provider and recipient

2. Background: Context and purpose of the financing arrangement

3. Definitions: Key terms used throughout the agreement including revenue definitions, calculation periods, and payment mechanics

4. Facility and Purpose: Details of the financing amount, intended use, and any conditions precedent

5. Revenue Share Calculation: Formula and methodology for calculating revenue share payments, including revenue base and percentage

6. Payment Terms: Timeline and mechanics of payments, including payment dates, methods, and reconciliation processes

7. Representations and Warranties: Statements of fact by the recipient regarding their business, authority, and financial condition

8. Covenants: Ongoing obligations of the recipient including financial covenants and operational requirements

9. Events of Default: Circumstances constituting breach and corresponding remedies available to the financing provider

What sections are optional to include in a Revenue Based Financing Agreement?

1. Security: Details of any security arrangements and enforcement rights when security is required for the financing

2. Information Rights: Additional reporting requirements and audit rights for larger facilities or higher-risk recipients

3. Conversion Rights: Rights to convert revenue share into equity, including conversion triggers and mechanics

4. Early Repayment: Terms and conditions for early repayment of the facility, including any premiums or penalties

What schedules should be included in a Revenue Based Financing Agreement?

1. Revenue Calculation Schedule: Detailed methodology for revenue calculations, including specific inclusions, exclusions, and accounting principles

2. Form of Revenue Report: Template for periodic revenue reporting including required information and format

3. Payment Schedule: Projected payment dates, minimum payment amounts, and caps if applicable

4. Security Documents: Forms of security documents and detailed security arrangements if applicable

5. Information Requirements: Detailed reporting requirements, templates, and timing for financial and operational information

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions































Clauses





























Industries

Financial Services and Markets Act 2000 (FSMA): Primary legislation governing financial services regulation in the UK, establishing regulatory framework and requirements for financial activities

Financial Services Act 2012: Reformed the UK financial regulatory structure, establishing the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA)

Consumer Credit Act 1974: Regulates consumer credit agreements and provides consumer protection in credit transactions

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Specifies which activities require FCA authorization and regulation

Unfair Contract Terms Act 1977: Controls the use of exclusion and limitation clauses in contracts

Consumer Rights Act 2015: Main consumer rights legislation, including unfair terms in consumer contracts

Companies Act 2006: Primary legislation governing company formation, administration, and operations in the UK

Law of Property Act 1925: Fundamental legislation governing property law and security interests

Enterprise Act 2002: Legislation covering business competition and corporate insolvency matters

UK GDPR: Post-Brexit data protection regulation implementing GDPR principles in UK law

Data Protection Act 2018: UK's implementation of data protection standards, working alongside UK GDPR

Proceeds of Crime Act 2002: Legislative framework for combating money laundering and proceeds of crime

Money Laundering Regulations 2017: Specific regulations detailing anti-money laundering requirements for businesses

Enterprise and Regulatory Reform Act 2013: Legislation aimed at promoting business growth and regulatory reform

Small Business, Enterprise and Employment Act 2015: Legislation supporting small businesses and improving business transparency

Financial Collateral Arrangements (No.2) Regulations 2003: Regulations governing financial collateral arrangements and security interests in financial instruments

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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