Can revenue contingent loans support the small business recovery?
Uncertainty will undoubtedly be impacting on business decisions with respect to commercial borrowing to help replace recession-induced falls in revenue. In such an unparalleled risk circumstance it is predictable that business, small business in particular, will be very cautious with respect to extensions of credit obligations.
A pertinent question is: Is there a different type of a loan instrument that overcomes these repayment concerns for borrowers? What follows explains that in concept there is such an instrument and it is known as a “revenue-contingent loan” (RCL).