Mayor Mamdani: Merchants Should Get Revenue-Based Loans

New York City Mayor Mamdani has come out in favor of revenue-based financing. As part of a promotional video for the NYC Future Fund, a government-supported low interest loan program, the touted structural benefit of the program is the fact that the loans are repaid by a percentage of revenue rather than fixed payments.

“Unlike a traditional term loan, a revenue-based loan enables better cash flow management as principal repayments are based on a percentage of monthly revenue instead of fixed payments,” the Fund’s website says. “When revenue is higher, payments increase, when revenue is lower, payments decrease.”

“We’re building a fairer economy for the entrepreneurs that support our neighborhoods,” Mamdani says in the video alongside Department of Small Business Services (SBS) Commissioner Kenny Minaya.

Compared to previous iterations of the program which took a flat 9.5% of a merchant’s revenue, this new one will take only as low as 2 percent of monthly revenue, depending on loan size and business needs.

Commissioner Minaya says that revenue-based financing is better because it accounts for seasonality in sales like an ice cream shop that may have slower business in the winter.

The NYC Future Fund is a public-private partnership between the City of New York and local Community Development Financial Institutions (CDFIs), including Community Reinvestment Fund, USA (CRF), Accompany Capital, Grow America and Pursuit, to support long-term growth for small business owners.

According to a press release by the city, Mayor Mamdani took the lead on launching this $80M fund for small businesses.

New York City is simply the latest in a series of government-led initiatives to promote and expand revenue-based financing.