Venture debt offers a strategic and swift way for SaaS companies to obtain funding, no matter their growth stage. For pre-market businesses who want funding and insight to set a strong foundation for growth, venture debt is more accessible and approachable than alternatives like equity and bank loans, which can be too competitive or require several criteria that new SaaS companies are yet to meet. For more established brands, debt allows them to receive faster and more flexible financing while extending their runway and minimizing their equity dilution. As interested parties assess the benefits of venture debt, considering what SaaS repayment terms best suit your clients is key.
Read on to learn why venture debt is a top funding choice in the year ahead, then explore three key SaaS repayment models—and discover why River SaaS is the ideal partner to support swift and sustainable growth.
Venture Debt: Fast and Flexible for Now and Later
Venture debt is rising as a top choice for funding SaaS companies, standing as a reliable option accessible to SaaS companies in all stages of their growth journeys. Though some market predictions hope for a turnaround in venture capital deals later in 2024, in the current state, these funds are extraordinarily difficult to obtain despite the record amount of dry powder available waiting for deals. The environment is hypercompetitive and often excludes SaaS companies that aren’t backed by certain growth metrics or aren’t willing to lose larger equity shares to secure a deal.
Venture debt offers fast and flexible funding that can be put into action faster for marketing or sales efforts to see an impact even more quickly. It’s known for its reliability, a factor that becomes increasingly important as wariness from 2023’s major bank collapse looms. It’s also designed to be supportive of your clients now and in the future, capable of growing with them as their needs shift or expand. This ensures your clients can count on strategic funding and a strong financing partner to uplift their efforts and help them achieve sustainable growth with the unique initiatives they need.
In addition to the flexibility in how venture debt can be used, it can also be tailored to serve your client’s needs through SaaS repayment structures.
Breaking Down 3 Strategic SaaS Repayment Structures
With venture debt, SaaS founders can borrow a sum of money to be returned in an agreed-upon structure. At River SaaS, we tailor our funding methods to best suit our clients, and offer three core financing structures that encourage swift, sustainable growth.
Traditional Installment Loan
With a traditional loan, clients can borrow funding in one lump sum or tranches. They make repayments that include both the principal and interest and any money that has been paid back can be reborrowed to continue supporting their growth.
If your client prefers a traditional loan option that streamlines interest and principal payments into one, this option offers the ideal structure and flexibility.
Interest-Only Loan
With an interest-only structure, your client can borrow funding in one lump sum or tranches, and then repay only the interest to start. Down the line, principal payments will kick in at an agreed-upon time. This option and its smaller initial payments allow borrowers to maintain more of their earnings and reinvest the funds back into their business, helping to accelerate growth even further.
If your client is seeking an option that allows more money to be put back into the business so they can level up their scaling even more rapidly, an interest-only loan is a perfect match.
Step-Up Structure
With a step-up structure, clients borrow money in full or in portions and their repayment terms start small in the beginning, then grow as their company grows. It’s similar to revenue-based financing, but with this option, all the terms are calculated from the beginning to provide full transparency and ensure your client knows exactly what to expect with their repayment structure. This option offers similar speed-to-impact benefits as interest only but allows your client to still make principal and interest payments from the start.
If your client wants to reap the benefits of both worlds—the interest and principal payments of a traditional loan, with the ability to reinvest more money early on with smaller payments—then a step-up structure is an ideal fit.
Not sure which is right for your client? We’re here to help.
Explore the Ideal SaaS Repayment Terms with River SaaS Capital
At River SaaS, our goal is to support the growth of SaaS companies with tailored funding solutions designed with the needs of your clients in mind. We offer three strategic and flexible SaaS repayment structures that ensure your clients get the money they need faster and repay it in the way that best supports their growth goals. We’re here to help you and your SaaS clients identify the best mechanism to support their growth, and as our relationship develops, we also offer hybrid and equity options that empower your clients with more reliable and accessible equity funding.
We’re proud to have supported some of the brightest SaaS minds over the years with reliable and strategic funding options. When you’re ready to level up the growth of your clients with better funding and tailored SaaS repayment terms, contact us to get started.
