Revenue-Based Financing

The Assumptions sheet sets the drivers for both a single advance and a rolling portfolio. For the borrower, you enter starting monthly revenue and a growth rate, which together shape how quickly the remittance grows.

• For the advance itself, you specify the amount, the factor multiple, the remit percentage, a term cap in months, and an origination fee. Portfolio inputs add the number of deals per month, an origination window, and a facility size.
• Risk inputs include a default rate, loss given default, and a recovery lag. Provider economics add a cost of funds and an operating expense percentage.

Four stress multipliers and sensitivity axis bounds allow scenario adjustment. All inputs are entered as positive numbers.

Each month, the borrower's revenue grows from its starting base, and the remit due equals that revenue multiplied by the remit percentage. The repayment cap is the advance amount times the factor, so total contractual repayment stops once the outstanding balance is cleared.

• Actual remittance is the lower of the remit due and the remaining balance; once the balance reaches zero, remittance ends. A hard term cap limits payback to a fixed number of months.
• If the borrower's revenue is too low or the remit percentage too small, the deal may not reach the factor within the term cap, and the shortfall is reported as a term-cap loss on the Returns sheet.
• The single-advance schedule is the building block for the portfolio. Each monthly cohort follows the same repayment curve, scaled by the number of deals and offset by its origination month.
• Portfolio aggregates track facility utilisation, defaults, recoveries, funding cost, operating expense, and net margin. Defaults reduce net outstanding through a cumulative corkscrew, while recoveries arrive with a lag and are added back as cash.

The portfolio section also compares new advances, cumulative originations, and facility drawn to ensure the warehouse limit is respected.

The Returns sheet brings together the key economics for the single advance and the portfolio. For a single deal, it shows the money multiple and payback month, along with a flag for whether payback was achieved, the realised factor versus the contracted factor, any term-cap loss, the weighted-average life, and both monthly and annualised internal rates of return.

• Portfolio outputs include gross and net money multiples, default losses, recoveries, realised loss rate, provider net margin, and peak facility utilisation. A spread block compares the single-advance internal rate of return against cost of funds, operating expense, and expected loss.
• The Vintages sheet provides per-cohort returns for up to 12 vintages, showing gross and net internal rates of return, money multiples, and payback, with each vintage truncated to the months remaining inside the 24-month observation window. The Stress sheet tests five scenarios: higher default rates, a higher loss given default, slower growth, and a combined worst case.

It also reports a break-even default rate and a break-even cost of funds. Stress figures use a linear money-multiple yield, which is mechanically lower than the periodic internal rate of return for an amortising stream, so they serve as a conservative read on outcomes.

This template is useful when you need to assess how repayment pace and returns move together. A lender can vary the remit percentage, factor multiple, or borrower growth to see the effect on payback time and realised money multiple.

• The portfolio section supports testing how origination volume, facility size, and default assumptions interact, including whether net outstanding stays within the facility limit. The stress table helps identify break-even thresholds, such as the default rate or cost of funds at which provider economics turn negative.
• The checks sheet validates structural identities, including repayment cap, remit bounds, non-negative balances, factor minimum, term-cap consistency, facility breach, and recovery-lag bounds.