What is a performance loan?

A performance loan is a type of financing that is typically linked to the achievement of specific performance metrics or milestones, often used in industries like entertainment, sports, or startups. The loan is structured so that repayment terms may depend on the borrower's ability to meet these predetermined goals, such as box office sales or revenue targets. This arrangement can provide flexibility for borrowers while minimizing risk for lenders, as payments are tied to actual performance outcomes.