Washington Launches $12M Revenue-Based Financing Fund to Support Small Businesses

 

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The State of Washington Launches Revenue-Based Financing Fund to Support Small Businesses

The State of Washington has launched a pioneering Revenue-Based Financing (RBF) Fund, allocating $12 million to support small businesses, particularly those in underbanked and underserved communities. This initiative is part of the broader State Small Business Credit Initiative (SSBCI), funded by the U.S. Department of the Treasury and managed by the Washington State Department of Commerce.

Key Features of the Revenue-Based Financing Fund

Flexible Repayment Structure

Unlike traditional loans, RBF offers upfront capital with repayments tied to a percentage of the business's revenue. This approach provides flexibility, especially for businesses with fluctuating incomes.

Fixed Pricing Model

Instead of charging interest, the program employs a fixed repayment multiple, typically ranging from 1.1x to 1.5x of the initial investment, depending on the specific loan product.

Diverse Loan Products

• Denkyem Loan: Offers working capital loans between $10,000 and $50,000 with repayments set at 5% of the business's adjusted monthly revenue, subject to a minimum monthly payment of $100. This product is particularly aimed at supporting Black-owned businesses in King County.

• Ajust Loan: Provides larger loans ranging from $50,001 to $500,000 (with exceptions up to $1 million) for established businesses. Repayments are based on 20% of the business's adjusted monthly revenue, with a minimum monthly payment of $1,000.

• Sharia-Compliant/Wakalah Product: Designed to comply with Islamic financing principles, this product offers revenue redemption equity models without charging interest, catering to businesses seeking Sharia-compliant financing options.

Eligibility Criteria

Criteria	Details
Location	Business must be located in Washington State
Business Type	For-profit, with ≤ 500 employees
Denkyem Loan	Min. 12 months in business (2 years preferred)
Ajust Loan	At least 3 years in business
Financial Viability	Proven & projected ability to repay

• Location: Businesses must be located and registered in Washington State.
• Business Type: Open to for-profit entities with 500 or fewer employees.

Operational History

• Denkyem Loan: Minimum of 12 months in business, with 2 years preferred.
• Ajust Loan: At least 3 years in business.

Financial Viability

Applicants should demonstrate the ability to repay the loan through previous and projected cash flows.

Application Process

Interested businesses can explore financing options and apply through the Grow America website. The application process involves selecting the appropriate loan product, connecting with financial experts, setting a growth plan to determine repayment terms, and receiving upfront capital with repayments aligned to the business's revenue.

Broader SSBCI Programs

The RBF Fund is one of five programs under Washington State's SSBCI 2.0, which received $163.4 million from the U.S. Treasury. Other programs include:

• Small Business Flex Fund 2: A $63 million microloan program offering fixed-rate loans to businesses and nonprofits with 50 or fewer employees and up to $5 million in revenue.

• Collateral Support Program (CSP): A $10 million program designed to assist small businesses having trouble qualifying for financing due to a collateral shortfall, particularly in SBA 504 bridge loans.

• Owner-Occupied Commercial Real-Estate Loan Program (CRE): A $25 million program that offers subsidized loans to small businesses for tenant improvements, construction, purchase, or refinance of owner-occupied commercial real estate.

• Venture Capital Fund: A $49 million fund investing in early-stage startups, focusing on underserved communities and sectors like climate tech and AI.

Impact and Future Outlook

The introduction of the RBF Fund represents a significant shift in how Washington State supports small businesses, particularly those in underserved communities. By offering flexible, revenue-based repayment structures, the program aims to provide more accessible financing options that align with the unique cash flow patterns of small businesses.

Focus Area	Details
Economic Growth	Program expected to stimulate statewide economic development
Entrepreneurship	Encourages innovation and small business creation
Job Creation	Supports new employment opportunities in local communities
Inclusive Access	Targets underserved and underbanked business owners
Model Program	May serve as a national model for future small business funding

As the program rolls out, it is expected to stimulate economic growth, foster entrepreneurship, and create jobs across the state. The success of the RBF Fund could serve as a model for other states looking to implement similar initiatives to support small businesses.

For more information and to apply, visit the Washington Revenue-Based Financing Fund.

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