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It takes a lot of self-confidence for a small business person to issue revenue notes. They aren't profit notes; they come off the top line not the bottom line.
by OliverJones 6y ago
It takes a lot of self-confidence for a small business person to issue revenue notes. They aren't profit notes; they come off the top line not the bottom line. So if the business goes through a cycle of loss-making this kind of debt can turn into a way to "fail fast." Then everybody loses.
Hopefully a small business considering this kind of loan can get some free advice from somebody like https://score.org/ https://score.org/ before they get in too deep. I know I'd recommend that before I made that kind of investment.
- LatteLazy 6y agoYeah, but revenue figures are much harder to manipulate than "profits"...
- Spooky23 6y agoGood point. The people who need this are the people least able to handle it. Many sole proprietor businesses get in trouble with sales tax collections when they try to juggle accounts with cash flow problems. Adding a loan product like this... ouch.
- OliverJones 6y agoYes, and sales tax authorities have zero tolerance for not making those remittances. THAT's a way to fail REALLY fast involving government padlocks on the front door.
- notahacker 6y agoLooks like the revenue shares are small percentage wise, although I guess many of them aren't high margin businesses either. Of course it also looks like some of the businesses are forecasting short term losses bigger than their current fundraising ask.