What are revenue sharing notes? | MainVest

The Revenue Sharing Note

When you hear “debt”, you probably think of a term loan.

When you lend someone money, they agree to pay back the amount you gave them and (usually) a little more on a set schedule.

Let’s say you’re giving a loan to an entrepreneur in your neighborhood, like Jenny who’s opening Main Street Cafe.

This is risky. Opening a small business is challenging and she might not make enough money to pay you back on time, if at all.

As an investor, you want Main Street Cafe to succeed. But requiring Jenny to start paying you back regardless of how well her business is doing in its early days could end up making it less successful in the long term.

There’s another way to do this.

Instead, you could invest in Main Street Cafe with a revenue sharing note.

This way, Main Street Cafe pays back a percentage of its revenue to its investors. Whether it takes Jenny weeks or months to start making sales, that’s when you would start earning returns.

Now you’re even more incentivized to help Jenny succeed.

The faster Main Street Cafe makes sales, the faster you receive repayments. And the faster you receive repayments, the higher the effective annual return!

You earn a financial return whenever Main Street Cafe makes a sale.

Let’s say you invest 10% of the money Main Street Cafe is raising and they agree to return 10% of their revenue to investors. Every time you, your neighbor, or any other customer purchases their coffee for three dollars, you earn three cents!

On MainVest, you can purchase revenue sharing notes from small businesses with as little as $100.

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