How to Borrow Against Future Revenue

by Danny Donahue; Updated September 26, 2017
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Small businesses can only succeed with proper financing. Very few entrepreneurs are equipped to finance their own businesses, so they must turn to outside sources for assistance. You will need some type of collateral if you need to obtain a loan for your small business. Property, vehicles and equipment are all fairly liquid and can be used as collateral. You will need to be a bit more creative if your company does not have any of these traditional types of collateral for a loan. You'll need to provide signed contracts that guarantee a certain amount of future revenue.

Step 1

Sign contracts with new clients. Agree to supply each of them with goods or services at a future date.

Step 2

Review each of the contracts. Calculate the value of each and add them together to project definite future income.

Step 3

Meet with the loan officer where you normally do business. Apply for a loan using your signed contracts as collateral.

Step 4

Visit other financial institutions to apply for a loan. Offer each bank or credit union your signed contracts as proof of future income.

Step 5

Apply with private venture capitalists as well as larger corporations in search of financing. Provide proof of future income to each possible loan provider.

Warnings

  • Fraud is a felony that can be penalized with fines, the loss of your business and incarceration.

About the Author

After learning electronics in the U.S. Navy in the 1980s, Danny Donahue spent a lifetime in the construction industry. He has worked with some of the finest construction talent in the Southeastern United States. Donahue has been a freelance writer since 2008, focusing his efforts on his beloved construction projects.

Photo Credits

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