Power your Company’s Growth with Debt Finance
Posted on: October 5th, 2016
Debt Financing is capital raised through the issuance of a loan. Debt financing is distinct from equity and can take the form of a variety of different loan structures.
Broadly speaking, there are asset based loans, cash flow based loans, revolving lines of credit and term loans. All of these structures fall under the heading of debt financing.
Debt financing is often a misunderstood by companies that need funding for acquisition or growth. Many business owners see banks as the only option for debt financing.
However, there is a wide market of progressive lenders that can fund your growth and acquisitions. These lenders think differently than Banks are make loans based on cash flow value.
These cash flow based lenders provide debt capital that can help you take several large growth steps. They size their loans based on a multiple of adjusted EBITDA, which often results in a company receiving much more funding at closing than they would receive from a bank.
Corporate debt financing usually involves multiple tiers of loans that work cohesively to deliver the required amount of financing, at the right price and term structure. Through customizing these loan tiers, a company can create a flexible and impactful debt financing structure.
One key to doing this is to assess how long you need to repay the loan. The bigger the growth or acquisition step, the more time you should allow for principal repayment.
The riskier the growth or acquisition step, the more time you should allow for principal repayment. Due to the growth of the middle market, there are more lenders than ever that will provide loans directly to your company, much like a bank will.
To extend a loan, these direct lenders need your company to meet their credit standards, size requirements and professionalism standards. These lenders can provide huge value to your firm, if your deal has strong cash flow and a good amount of equity.
The equity does not need to be all cash, it can be rollover equity or in the form of a seller note. The best part about working with cash flow based lenders is the creativity you can bring to the structuring of the loan.
If you position the business right and show strong numbers, you can often bring in all the money you as debt capital and avoid having to raise equity in the process. Progressive debt capital is the cheapest form of equity out there.
Attract Capital has different options for companies in search of debt financing. With this organization in your corner, you can always expect to get the best end of every deal. Visit their website, choose from various options of debt financing and use it to expand your business, shortly!