Will Limkemann
Business Advisor

The Constant Entrepreneur:
Advice for Running a Productive Business

January 06th, 2010 | Uncategorized

Royalty Financing

Here is an innovative financing strategy for cash-strapped businesses. It’s called royalty financing. It works like this: The business borrows money against future sales and in turn pays a small percentage (royalty) of each invoice to the lender until the loan and interest is paid off. I’ve just recently run across this interesting financing strategy, and it may be worth businesses looking into. My suspicion is that it is a costly way to borrow but may be an option for businesses that have exhausted other options. Check out this brief article.

Will Limkemann

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  1. John Hamilton Says:
    January 19th, 2010 at 9:29 pm

    Will,

    Yes, Vested for Growth is a source of royalty financing and we have closed on 2 deals in the past quarter and expect to close on another on Friday. Our biggest barrier is that most of the market is thinking “debt vs equity” and the option of royalty financing is often overlooked so I appreciate your blog post. We have seen a real increase in demand for our type of capital. Fortunately, there are more Angel investors and other economic development groups that are beginning to partner with us and do deals on their own. Our focus is on established companies and we do not do start ups, unlike the focus of the article.
    You can find more info on our website and thanks for helping us to spread the word.

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