RBF package1

REVENUE BASED FUNDING PROGRAM

Want Money for Your Business Revenue-based financing can make all the difference to new entrepreneurs who have high gross margins or revenues, but little collateral.

Fast and easy approval process provides quick access to funds! Loans from 5K to 2M

Use the money to expand, renovate, advertise, purchase inventory or anything else you can think of!

In the new economy it can be very difficult or impossible for a small business owner or entrepreneur to find capital to fund small business growth. Historically, small businesses and entrepreneurs have sought capital through "Angel' investors and traditional lending institutions, however these options are increasingly unavailable even to well established businesses. The revenue-based finance model, sometimes called the royalty-based finance model (RBF), is a financing plan that was introduced over 50 years ago and is gaining popularity today. The RBF model provides unique benefits to both the small business and the investor.

High approval rate 4 to 24 Month Terms No interest payments

No monthly minimum payments No upfront costs or hidden fees No usage restrictions

Basic requirements for revenue based funding: To take advantage of RBF, you must: .Deposit Amounts Each Month $10K or greater Number of Deposits Each Month 10 or greater

JDB Financial LLC www.jdbfinancialllc.com info@jdbfinancialllc.com 330 832 5253 (f) 330 754 1419 Loans based on your Bank Deposits. The Client borrows 5% to 15% of the annual gross flowing through the bank account.

The loan is repaid daily or weekly by ACH payments. This is a loan NOT a merchant cash advance.

Enter Name Here Tel: Fax: Email:

Merchant Information DBA:

Legal Business Name: Street Address:

City:

Business Phone:

State: Email:

Business Fax:

Business Type:

Estimated Total Monthly Sales: Date Business Started:

(mm/dd/yy)

Yrs in Business:

Do you own or lease the property:

Landlord Phone #:

Landlord Name: Landlord Address:

Requested Amount:

Zip:

State:

Is your business for sale?

Mortgage Contact Number:

Lease

Own

Landlord Fax #:

City:

Mortgage Contact Name:

Yes

Have you had a previous No cash advance?

Yes

No

Intended Use of Cash Advance:

Federal Tax ID:

Have you ever filed for bankruptcy?

Yes

No

Owner #1

Owner #2

Owner Name:

Owner Name:

Home Street Address:

Cell Phone:

Home Phone:

Social Security Number:

Date of Birth (00/00/0000):

Social Security Number: mos

No

City:

Home Phone:

yrs

Yes

State:

Zip Code:

City:

Length of Ownership:

Any federal or state tax liens?

Home Street Address:

State:

Zip Code:

% Ownership:

Zip:

Cell Phone:

% Ownership:

Date of Birth (00/00/0000): Length of Ownership:

yrs

mos

Credit Card Processing Information Merchant Account Number:

Current Processor: Number of Terminals at Location:

Terminal Type:

Time with Current Processor:

Average Monthly Volume – Visa/MC:

Please fax or email the following along with your application: • Last 4 months of Visa/MasterCard Statements

• 6 most recent month’s Complete Bank Statement (all pages)

Notes:

Submission Requirements are: Lease or Mortgage Statement Most Recent 1 year Business Federal Tax Returns – All Pages – All Schedules Business Checking Account – Voided Check Borrowers Valid Driver’s License Title:

By:

Print Name:

Date:

(Signature)

Owner 1: Owner 2:

(Signature) (Signature)

Print Name:

Date:

Print Name:

Date: FA_06062012

UNSECURED REVENUE BASED FUNDING. The Client borrows 5% to 10% of the annual gross flowing through the bank account. The terms of the loan are based on strength of borrower, loan amount and your bank statements.

Criteria: 1) 6 months bank statements showing minimum of $10,000.00 monthly cashflow 2) Minimum 550 credit score 3) Copy of state issued ID 4) Copy of business license or professional license 5) Voided business account check 6) Copy of terms & signature page of business lease agreement.

7) Complete one page application 8) Last year’s tax returns are sometimes required.

No upfront fees! Flexible Terms, Close in Days BENEFITS OF REVENUE BASED FINANCING: 1.

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The Merchant doesn’t have to figure out the valuation of the business and this form of financing does not dilute the ownership equity of the business.

The Merchant does not have to give up any equity in the business and there is no personal guarantor or change of management. It also does not require the Investor to have a board seat.

The Merchant pays the loan back on a variable basis according to the ebb and flow of cash flow. It turns a traditionally fixed expense into a variable expense.

The Investor receives his ROI without having to have an exit strategy such as an IPO or acquisition.

The Merchant is under less pressure since the Investor is getting immediate repayment.

Borrowing costs are tax deductible.

The Cost of Capital is 25% to 35% targeted vs. 150% equity.

The Factor Rate is much less than an effective interest rate required by an equity Investor on their invested capital if business should be sold.

The legal fees are lower than with equity financing.

RBF focuses less on the personal credit score and more on the business situation, revenue model and business cycles. As sales increase, Merchant is qualified for increased funding.

Does not require hard assets as collateral. This is an unsecured form of financing.

The Merchant qualifies for continual rounds of funding without excessive paperwork.

Minimum documentation, 24 hour approvals, fast funding (within 7 days).

Does not encumber the Merchant or his company with liens, contingent or even standing liabilities on the books of the business.

The Merchant and the Investor have the same goals regarding the growth of the business.

Both are looking towards the long term growth of the business instead of an impending liquidity event to satisfy the interests of the Investor.

Loan can be paid off faster as revenues grow.

The Investor benefits by receiving increasing payments as revenues increase.

Return to the Investor can be lower because the ROI is received more quickly.

There are no restrictive covenants regarding business usage of loan proceeds.

REVENUE BASED FINANCING: USED AS ANTI VENTURECAPITAL At a first cut, the start-up world consists of two broad categories: small business start-ups and high impact start-ups. The former are typically boot-strapped to the point where they can access traditional credit facilities to finance modest growth – vehicles that give the investor a fixed payment schedule rather than an equity interest. High impact startups generally need outside risk capital investors, typically venture capitalists who are looking for “uncapped” returns through an equity interest – returns they can eventually realize by selling their equity stake in an “exit” transaction. Between these two paradigms there are a number of structures that “mix and match” the features of the traditional debt and equity paradigms. One such alternative is socalled revenue-based financing. While the opportunities where revenue-based financing makes in the high impact start-up universe are relatively rare, if you are an entrepreneur with one of those opportunities, a revenue-based financing structure can be very appealing.

Revenue-based financing: The basics. Revenue-based financing, often called “revenue royalty certificate” financing, involves an investor providing capital to a business in exchange for the business’ promise to pay the investor a percentage of future revenues. The “royalty” percentage is usually based on gross revenues, and the return is usually based on a multiple of the investment. A simple example would be a deal in which the entrepreneur agrees to pay the investor 5% of gross revenues until the investor has received an amount equal to 3 times the capital provided by the investor. A common tweak to the model (I suspect you can think of many more) would incorporate a rate of return element into the deal by making the return multiple vary depending on how long it takes to achieve it.

Revenue-based financing: The appeal. If you look past the details, the essence of a revenue royalty certificate financing looks a lot like a traditional equity-based venture financing deal: the company gets some risk capital (i.e. capital that there is no obligation to repay in the eventuality that future revenues are not sufficient to repay it), and the investor gets the opportunity for a nice risk-adjusted return (the return target, whether a simple multiple of capital or a timeadjusted multiple of capital, is typically significantly greater than the interest rate for a traditional loan). The attraction, then, of revenue-based financing is in the details. For the entrepreneur, the appeal is not having to give up any equity (ownership) in the business to the investor – and no related obligation to create a market for the business’ equity. For the investor, the appeal is the assurance of a return (assuming there are revenues, of course) whether or not there is ever a market for the company’s equity. The investor’s return is not as a practical matter tied to the entrepreneur having an obligation to sell the business to a third party or create a public market for the business’ equity.

Revenue-based financing: The candidate start-up profile. Alas, while the appeal of revenuebased financing is real, the range of high impact start-up situations where it makes sense is fairly narrow. Clearly, it rarely applies to a start-up that can access sufficient capital from more traditional non-dilutive funds sources, for example banks. Traditional business lenders will almost

always be cheaper, in terms of the returns they seek, than risk capital investors who by definition are looking for equity-like returns. On the other hand, revenue-based financing will generally not work for risk capital investors where the risks (technical, market, execution) are extensive, which is to say the kind of start-ups that are typically most attractive to venture capital investors and venture-like angel investors. It is over the middle ground – start-ups with more risk and upside than the typical bankable company, but less risk and upside than the typical venture capital candidate – where revenue-based financing can find a home. More particularly, whether or not it might otherwise be appealing to the entrepreneur, the revenue-based financing model can be a viable alternative for a startup with some combination of the following attributes: Good nearterm revenue visibility, high gross margins, well-defined capital needs and, as often as not, limited scaling potential; situations where there is more risk than a traditional lender would accept, but less risk (and likely less upside) than a traditional venture investor expects to take.

Looked at from the other side of the table, it will generally not make sense where the technical, market, or execution risk make the likelihood of significant (relative to the payout hurdles of the revenue-based financing deal) high margin revenues commencing within 12-24 months problematic. So, for an obvious example, forget pre-clinical drug discovery and development start-ups.

Revenue-based financing: A caveat. Venture capital investors and similar risk capital investors typically make investments based more on the quality of the team than either the market opportunity or technology. They go to great (and often controversial) lengths to make sure the team doesn’t pre-maturely exit the deal, thus, founder and employee vesting schedules for equity, co- sale rights, etc. Those kinds of “golden handcuffs,” particularly vesting, are problematic in revenue-based financing structures. Revenue-based financing investors should be careful about making sure the entrepreneur is really committed to see the startup through to the point where either the investor has achieved the agreed upon return or the business can be successfully managed by a new team.

Revenue-based financing: Conclusion. Some combination of technical, market, and execution risk, often further complicated by uncertain capital requirements, make most high impact start-ups poor candidates for revenue-based financing structures. But for the occasional high impact startup in the revenue-based financing sweet spot in terms of those risks, particularly those with welldefined capital requirements and limited scaling potential, revenue-based financing is worth a hard look.

When the banks say “no,” we’re you next call info@jdbfinancialllc.com 330 832 5253 www.jdbfinancialllc.com www.thathardmoneyguy.com