Growth Capital Lending and MRR/ARR Financing

Growth capital lending and MRR/ARR financing are two forms of financing that are increasingly popular among startups and high-growth companies. These types of financing provide much-needed capital to fuel expansion and growth, allowing businesses to scale their operations and take advantage of new opportunities.

Customers Bank has more than $22 billion in assets and offers commercial and consumer banking services nationwide. Our commercial services include customized lending solutions like growth capital lending, MRR/ARR financing, and products specifically designed to meet the needs of tech businesses.

What is Growth Capital Lending?

Growth capital lending is a form of debt financing that provides businesses with the capital they need to grow. Unlike traditional bank loans, specialized lenders like Customers Bank typically provide growth capital loans that understand the unique needs of high-growth companies. These lenders are willing to take on more risk than traditional banks and are often more flexible in their lending terms.

What is MRR/ARR Financing?

MRR/ARR financing, on the other hand, is a form of equity financing that allows businesses to raise capital based on their monthly recurring revenue (MRR) or annual recurring revenue (ARR). This type of financing is particularly attractive for software-as-a-service (SaaS) companies or other businesses with predictable subscription-based revenue streams. By leveraging their MRR or ARR, these companies can access the capital they need to invest in product development, marketing, sales, and customer acquisition.

Benefits of Growth Capital Lending and MRR/ARR Financing

Both growth capital lending and MRR/ARR financing offer significant benefits for businesses seeking to expand and grow. One key advantage is that these financing forms do not require businesses to relinquish ownership or control of their companies. Instead, they provide access to additional capital while allowing the business owner to retain full ownership and control.

Another benefit is that growth capital lending and MRR/ARR financing are often more accessible than traditional bank loans or venture capital funding. Traditional banks may hesitate to lend to high-growth companies due to the perceived risk, while venture capital funding often comes with significant dilution of ownership. On the other hand, growth capital lenders and MRR/ARR investors have a deeper understanding of the unique needs of high-growth companies and are more willing to take on risk in exchange for potential returns.

Growth capital lending and MRR/ARR financing can be structured to align with the company’s growth trajectory. For example, growth capital loans can be structured with flexible repayment terms that allow for higher payments as the business grows and generates more revenue. Similarly, MRR/ARR financing can be structured as revenue-based financing, where repayments are tied to a percentage of the company’s monthly or annual recurring revenue.

Summary

With their flexibility and alignment with the company’s growth trajectory, growth capital lending and MRR/ARR financing help startups and small businesses manage their cash flow better and offer significant advantages over traditional bank loans or venture capital funding. Customers Bank has expertise and experience in the technology industry space and would be proud to be your partner. Contact us today to learn more.