Oregon Offers Revenue-Based Financing With 2.0 Factor Rates

The State of Oregon is in the revenue-based financing business, offering small businesses funding up to $1 million in exchange for a percentage of their future sales and a 2.0 factor rate payback.

It’s called the Oregon Royalty Loan Program and the factor rate cost is branded as a 2X Royalty. Eligibility is based off of historical sales and projected future sales.

“Oregon Royalty Loans are repaid at a predetermined percentage of sales / revenue on a monthly basis until an overall amount, typically 2X, is returned,” the State touts.

An official flyer for the program says that merchants only have to make the required royalty percentage up until they’ve paid 2x the funded amount in full, which could take up to 3-5 years, at which point the royalties stop. The flyer for the program also labels royalty financing as “revenue-financing” in its example at the bottom.

“The percentage of sales varies with each project, but will yield a 2X return from royalty payments over a three– to five–year period,” the State says. “Once the 2X repayment has been achieved, royalty payments stop, and the company has satisfied its repayment obligation.”

Promotional materials say that this may better align with a business’s cash flow.

In Oregon’s official business code, it defines Royalty in the program as “payments calculated as a percentage of the borrower’s sales or revenue as a means of effecting an adequate rate of return typically up to 2X on the monies loaned, as determined at the sole discretion of the Department.”

2X is deemed an “adequate rate of return.” The product is collateralized and personally guaranteed.

The program is similar to New York City’s Revenue-Based Loan Program heralded by Mayor Mamdani and the State of Washington’s Revenue-Based Financing Fund.