This Revenue Based Financing variant ties loan repayments directly to a fixed percentage of the gross revenue earned by a development project. Gross revenue refers to the total income before costs, making this a straightforward and transparent repayment model. For UK property developers, it offers flexibility and reduces pressure during slower income periods, while allowing lenders to benefit proportionally from performance. It is especially attractive in early sales phases or mixed-use schemes with varied income sources. Common repayment percentages range from 2% to 10% depending on project risk and return expectations.
Within a Revenue Based Financing structure, using a percentage of gross revenue introduces a predictable yet performance-sensitive repayment mechanism that directly tracks top-line income rather than profit. This means repayments commence as soon as revenue is generated, regardless of cost overruns or margin compression, which can materially influence short-term liquidity planning. Compared with Flexible Instalment Based on Income, it is typically less discretionary and more formula-driven, giving lenders clearer visibility on cash flow participation. In funded developments, the practical operation of this model is often controlled through security such as a Charge Over Accounts, ensuring that agreed revenue shares are captured efficiently at source.
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