Royalty-Based Investment vs. Traditional Business Loan, Which is Best?

There comes a time in the life of a small business in which an entrepreneur must decide if they want to level off or go to the next phase of growth. This is called reaching a proverbial ‘crossroads. However, even if the business owner decides they want to grow and buy more inventory, hire more employees, or purchase more equipment, there is often one common obstacle… and that is capital. Money is always at the root of growth.

Royalty-Based Investments vs. Traditional Business Loans, Which is Best?

Traditional bank loans for business owners commonly require a minimum of $100k gross income before a bank lender will even consider it. That puts many small business owners at a disadvantage, because they may not have the numbers to justify the loan. It can also be difficult to get approved and there may be more “hoops” to jump through.

What kind of hoops? Well, think of hoops as requirements. Here are common business loan requirements:

  • Collateral necessary
  • Credit score (of owner)
  • Age of the business
  • Annual revenue
  • Net operating income
  • Owner’s and business’s debt-to-credit ratio
  • How you plan to use the funds

Bank loans are also a big commitment, often 5 years or more. They typically come with 5-year increments; such as 5-year, 10-year, 15-year, 20-year business loans. These loans have been around for decades.

Royalty-based investments are becoming a ‘thing’ and are expected to someday surpass traditional commercial loans as a choice for small business
funding. What are royalty-based investments vs. traditional bank loans?

To describe it simply, royalty financing is a type of investment in which the funding is based upon future profit or revenue. For example, a small pool company in Pearland, Texas known as Prosperity Pools needed funding to buy a vehicle and equipment as their business grew. They applied for an SBA loan but were declined. Then they discovered the power of a royalty financing program, where the investors got their money back by taking royalties from the overall sales. Instead of interest, the investment company charges a fixed, flat rate fee.

Given the momentum you can make by having the extra capital to grow your business, it is easier to repay, and it can be done a lot faster than with a traditional loan. There are several companies who are pioneering this idea, including PayPal, Square and Yalber. Yalber is a top pick, because this is their exclusive product and call to fame, meaning they are specialists in revenue-based financing.

Some perks of royalty-based (or revenue-based) investments:

  • No personal guarantee or collateral required.
  • Fast and easy approval process within 24 hrs.
  • Submit documents that show your business’s progress/performance for past 3 months.
  • As soon as the payback amount is fully paid, the royalty stops. So, even if you sign up for a 3-year payback and then pay it off within 11 months, you never owe any more. The flat rate fee is built into the repayment, so you know how much it is ahead of time. It never fluctuates.
  • You have access to a customer portal to see your progress daily.

Having experienced both traditional bank business loans firsthand, the royalty-based investment has been a much better solution to getting the capital needed for business growth. Royalty Investments do not impact the owner’s credit score and neither positively nor adversely affect the Dunham Bradstreet score of the business.

So, Let’s Review Which is Best… Royalty-Based Investments vs. Traditional Business Loans?

As it states on their website, Yalber’s Royalty-Based Investment services gives companies an opportunity to increase their business growth, without having to be heavily bogged down by a long-term business loan commitment. Yalber is paving the way for every entrepreneur to become a big company. Apply now and get your small business underway in one to three business days. Get to the next level – it’s time to “Level Up!

Author: Prosperity Shoppe

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *