Due to the extensive economic disruption caused by the COVID-19 pandemic, the United Kingdom's Government created a range of measures to help support businesses survive the loss in revenues and cashflow. To help smaller businesses (SMEs), the Coronavirus Business Interruption Loan Scheme (CBILS) was set up. The scheme operates through the British Business Bank via more than 40 accredited lenders including high street banks, challenger banks, asset based lenders and smaller specialist local lenders. These lenders can then provide up to five million British pounds (GBP) in the form of term loans, overdraft, invoice finance and asset finance.

Between the 10th of May, 2020 and the 31st of May, 2021, the cumulative number of approved facilities through the Coronavirus Business Interruption Loan Scheme (CBILS) in the United Kingdom (UK) has reached more than 110,000 at a combined value of approximately 26 billion British pounds.

In response to the extensive economic disruption caused by the COVID-19 pandemic, the United Kingdom's Government created a range of measures to help support businesses survive the loss in revenues and cashflow. To help mid-sized and larger enterprises with a group turnover of more than 45 million British pounds, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) was set up.

The scheme operates through the British Business Bank via accredited lenders, which can provide up to 200 million British pounds in finance. These lenders can then provide finance in the form of term loans, revolving credit facilities (overdrafts), invoice finance and asset finance. For term loans and revolving credit facilities, finance that could be offered was increased from 50 million GBP after an announcement by HM Treasury on the 19th of May 2020.

Between the 10th of May, 2020 and the 31st of May, 2021, the cumulative number of approved facilities through the Coronavirus Large Business Interruption Loan Scheme (CLBILS) in the United Kingdom (UK) has amounted to 753 at a cumulative value of more than 5.6 billion British pounds.

In response to the extensive economic disruption caused by the COVID-19 pandemic, the United Kingdom's government created a range of measures to help support businesses survive the loss in revenues and cashflow. To help businesses, the Bounce Back Loan Scheme (BBLS) was set up. The scheme, which is a part of a wider package of government support for UK businesses and employees allows lenders to provide a six-year term loan from two thousand British pounds up to 25 percent of a business' turnover. The maximum loan amount is currently fifty thousand British pounds.

Between May 10, 2020 and May 31, 2021, nearly 1.56 million businesses have been approved for finance with the cumulative value of lending through the Bounce Back Loan Scheme (BBLS) amounting to approximately 47.4 billion British pounds.

By the end of the UK's job retention scheme, which ran from April 2020, to September 2021, approximately 11.7 million jobs, from 1.3 million different employers, were furloughed in the United Kingdom. The day with the most jobs furloughed at once was May 8, 2020, when 8.86 million jobs were on the job retention scheme. The scheme, introduced in response to the economic damage caused by the Coronavirus (COVID-19) pandemic, covered 80 percent of an employees' usual monthly wage, up to 2,500 British pounds a month. How much did the scheme cost? The UK government spent approximately 70 billion British pounds on the job retention scheme. Due to spending commitments such as this, as well as depressed revenue sources, UK government finances took a severe hit in the 2020/21 financial year. Government borrowing was approximately 333 billion pounds in 2020/21, while government debt as a share of GDP shot up from 80.3 percent in 2018/19, to 96.5 percent by 2020/21. Getting this debt down has proven difficult in subsequent financial years, with high inflation, war in Ukraine, and Cost of Living Crisis putting even more pressure on public finances. Popular scheme may not be enough to save Sunak The current Prime Minister, Rishi Sunak, held the position of Chancellor of the Exchequer throughout the duration of the furlough scheme. While this scheme and Sunak himself were popular for much of that time, Sunak has since seen his popularity tumble. Shortly after succeeding Liz Truss as Prime Minister in October 2021, Sunak was seen by 30 percent of people as being the best person for his job, while his net favorability rating was around -19 percent. By May 2024, just before he announced the 2024 general election, just 19 percent of people thought he made the best Prime Minister, and his net favorability rating had fallen to -51 percent.

The government of the United Kingdom borrowed approximately 121.9 billion British pounds in the 2023/24 financial year. In 2020/21, government borrowing was over 353 billion pounds, due to increased financial support to public services during the COVID-19 pandemic, combined with reduced revenue due to the lockdowns.

According to Cognitive Market Research, the global Revenue Based Financing market size will be USD 2985.2 million in 2024. It will expand at a compound annual growth rate (CAGR) of 61.80% from 2024 to 2031.

North America held the major market share for more than 40% of the global revenue with a market size of USD 1194.08 million in 2024 and will grow at a compound annual growth rate (CAGR) of 60.0% from 2024 to 2031.
Europe accounted for a market share of over 30% of the global revenue with a market size of USD 895.56 million.
Asia Pacific held a market share of around 23% of the global revenue with a market size of USD 686.60 million in 2024 and will grow at a compound annual growth rate (CAGR) of 63.8% from 2024 to 2031.
Latin America had a market share of more than 5% of the global revenue with a market size of USD 149.26 million in 2024 and will grow at a compound annual growth rate (CAGR) of 61.2% from 2024 to 2031.
Middle East and Africa had a market share of around 2% of the global revenue and was estimated at a market size of USD 59.70 million in 2024 and will grow at a compound annual growth rate (CAGR) of 61.5% from 2024 to 2031.
The healthcare industry is the fastest-growing category in the Revenue-Based Financing market. The rising demand for healthcare services, especially after the global pandemic, has led to accelerated growth within the sector

Market Dynamics of Revenue Based Financing Market

Key Drivers for Revenue Based Financing Market

Increased Demand for Flexible Capital to Boost Market Growth

In the Revenue-Based Financing Market, one of the most significant drivers is the growing demand for flexible capital solutions among startups and small businesses. Unlike traditional financing methods that often require fixed repayments regardless of a company’s cash flow, revenue-based financing allows businesses to repay their investors based on their monthly revenues. This flexibility is particularly appealing to entrepreneurs who face seasonal fluctuations or unexpected market challenges. By aligning repayment schedules with revenue performance, businesses can manage their cash flow more effectively, reducing the financial burden during lean periods and fostering sustainable growth. This adaptability not only enhances the appeal of revenue-based financing but also empowers businesses to make strategic investments that can drive long-term success without the fear of crippling debt. For instance, in the UK, the government launched the future fund scheme on May 20, 2020, which offers convertible loans to startups based on their revenue

Increasing Adoption of Digital Platforms and Fintech Solutions to Drive Market Growth

The surge in digital platforms and fintech solutions is another key driver in the Revenue-Based Financing market. With advancements in technology, fintech companies have made it easier for businesses to access funding through online platforms, streamlining the application and approval processes. Digital platforms also provide investors with detailed insights into business performance, facilitating better decision-making and risk management. The scalability and transparency offered by these platforms have accelerated the adoption of RBF, making it a popular choice among tech-driven startups and e-commerce businesses looking for quick and hassle-free funding solutions.

Restraint Factor for the Revenue Based Financing Market

High Cost of Capital, will Limit Market Growth

One significant restraint in the Revenue-Based Financing (RBF) market is the high cost of capital associated with this financing model. While RBF provides flexibility in repayment structures, the overall cost can be higher than traditional loans. Investors often charge higher fees or revenue percentages in exchange for the lower risk they assume. For startups and small businesses with limited profit margins, this elevated cost can strain their financial resources and deter them from choosing RBF over other funding options. Consequently, the perception of RBF as a more expensive alternative may hinder its widespread adoption among potential borrowers.

Impact of Covid-19 on the Revenue Based Financing Market

The COVID-19 pandemic has significantly impacted the Revenue-Based Financing Market, catalyzing both challenges and opportunities for businesses seeking flexible capital solutions. As many startups faced unprecedented financial pressures due to lockdowns and ...

The government of the United Kingdom borrowed approximately 1.9 percent worth of its GDP in the 2023/24 financial year, compared with three percent in 2022/23. In 2020/21, government borrowing reached 11.6 percent of GDP, due to increased financial support to public services during the COVID-19 pandemic, combined with reduced revenue because of societal lockdowns.

Government debt in the United Kingdom reached over 2.9 trillion British pounds in 2023/24, compared with 1.9 trillion pounds in 2019/20. Although the amount of public sector debt has been rising for some time, there was a noticeable uptick between 2019/20 and 2020/21, when government spending increased substantially due to the economic impact of the COVID-19 pandemic.

One of the major duties the Bank of England (BoE) is tasked with is keeping inflation rates low and stable. The usual tactic for keeping inflation rates down, and therefore the price of goods and services stable by the Bank of England is through lowering the Bank Rate. Such a measure was used in 2008 during the global recession when the BoE lowered the bank base rate from 5 percent to 0.5 percent. Due to the economic fears surrounding the COVID-19 virus, as of the 19th of March 2020, the bank base rate was set to its lowest ever standing. The issue with lowering interest rates is that there is an end limit as to how low they can go.

Quantitative easing

Quantitative easing is a measure that central banks can use to inject money into the economy to hopefully boost spending and investment. Quantitative easing is the creation of digital money in order to purchase government bonds. By purchasing large amounts of government bonds, the interest rates on those bonds lower. This in turn means that the interest rates offered on loans for the purchasing of mortgages or business loans also lowers, encouraging spending and stimulating the economy.

Large enterprises jump at the opportunity

After the initial stimulus of 200 billion British pounds through quantitative easing in March 2020, the Bank of England announced in June that they would increase the amount by a further one hundred billion British pounds. In March of 2020, the headline flow of borrowing by non-financial industries including construction, transport, real estate and the manufacturing sectors increased significantly.

In January 2021, approximately 9.58 million jobs in Europe's three largest economies were being supported by temporary employment schemes, with the UK's job retention scheme supporting approximately 4.88 million jobs, France's Chômage partiel scheme 2.1 million, while 2.6 million workers were on Germany's Kurzarbeit system. Although some of these partial employment mechanisms were already in place before the COVID-19 pandemic, their usage accelerated considerably after the first Coronavirus lockdowns in Spring 2020. How much will this cost European governments? Early on in the pandemic, European governments moved swiftly to limit the damage that the Coronavirus pandemic would cause to the labor market. The spectre of mass unemployment, which would put a huge strain on European benefit systems anyway, was enough to encourage significant government spending and intervention. To this end, the European Union made 100 billion Euros of loans available through it's unemployment support fund (SURE). As of March 2021, Italy had received 20.95 billion Euros in loans from the SURE mechanism, and is set to be loaned 27.4 billion Euros overall. Spain and Poland will receive the second and third highest amount from the plan, at 21.3 billion, and 15.06 billion Euros respectively. What about the UK? The United Kingdom is not involved in the European Union's SURE scheme, but has also paid substantial amounts of money to keep unemployment at bay. As of January 31, 2021, there had been more than 11.2 million jobs furloughed on the UK's job retention scheme. By this date, the expenditure of this measure had reached 53.8 billion British pounds, with this figure expected to increase further, following the extension of the scheme to September 2021.