Loan types
Financing types
Loan types
Overview
Project finance is a specialized type of financing used for large-scale infrastructure or development projects. It involves the structuring of long-term loans specifically tailored for the funding of a particular project, often with repayment primarily based on the project's cash flow or assets. Project finance loans are long term loans and typically requires an equity contribution (10-30%) from the project sponsors or investors.
Ticket Size: 5M- 850M
Tenor: 6-20y (depends on the nature and lifespan of the project)
Lender Margin Range: 2%-10%
Project finance
Mezzanine loans are a type of loan that combines elements of debt and equity. This means that the lender provides funds to the borrower, but also has the option to convert that loan into an ownership stake in the company if the borrower defaults on the loan. These loans are considered subordinate, which means they have a lower priority compared to senior lenders when it comes to the assets of the company. If the company faces financial difficulties and assets need to be sold to repay loans, the senior lender gets paid first before the mezzanine lender. Mezzanine loans are often used in situations like acquisitions or buyouts.
Range: 1-100M
Pricing: 8-10%
Amortization: 2-8years
Mezzanine
Asset-based finance is a specialized method of providing companies with working capital and term loans that use accounts receivable, inventory, machinery, equipment, or real estate as collateral. It is essentially any loan to a company that is secured by one of the company's assets such as real estate, inventory, equipment, or accounts receivable. These loans can either be a revolving line of credit or a term loan, if the borrower can’t repay, the lender can take possession of the assets. It can be particularly beneficial for businesses or individuals with valuable assets but limited cash flow or credit history.
Range: 1M-150M
Amortization: 3-8years
Pricing: 4-9%
Asset-backed financing (ABF)
With Invoice Financing, a company leverages its outstanding invoices as collateral to gain immediate cash flow. Rather than waiting for clients or customers to pay their invoices, businesses can get an advance on those amounts, ensuring consistent cash flow. This method became especially prevalent during challenging economic times when maintaining operational liquidity was paramount for many companies. Invoice financing offers a quick and convenient way to access capital without diluting ownership.
Range:
200k-15M Amortization:
30 days-2 years Pricing: 3-8%
Invoice financing
With Revenue-Based Financing, a company does not give up ownership or equity in the business, instead the company agrees to share a percentage of its future revenue also seen as revenue share. Revenue based financing started during the pandemic when start-ups struggled with raising funds. Revenue based financing is a fast and easily accessible funding solution.
Range: 200k-15M
Amortization: 6month-3 years
Pricing: 6-10%
Revenue-based financing (RBF)
A term loan is a type of loan that is commonly used by companies to finance specific investments or business activities. It is typically repaid over a fixed period, known as the loan term, which can range from a few months to several years. The borrower agrees to pay the borrowed amount back in regular instalments according to a specific schedule. This schedule may be based on a fixed interest rate or a floating interest rate, which can change over time. Term loans also offer the option of making a larger payment to reduce the regular payments and the overall cost of the loan.
Range: 1m-100M
Amortization: 2-6years
Pricing: 6-10%
Collateral: Secured and unsecured debt opportunity
Term loan
Bridge Financing
Bridge Financing is a short-term loan designed to help small and medium-sized enterprises (SMEs), large institutions and publicly traded companies cover immediate expenses until they secure long-term funding or revenue. We provide very quick, temporary capital to bridge the gap during transitional periods, such as awaiting a bank loan approval, closing a round of investment, working capital, M&A or any other loan purpose.
Execution Speed: 3-4 business days to close
Range: 250k-20M USD
Amortization: 1month – 12month with longer terms being case by case
Pricing: MOIC ranging from 1.15x - 1.45x
Early repayment incentive: Providing a discount of 30-50% for prepayments made within the initial half of the loan’s maturity. Incentivize partners with attractive prepayment discounts at a lower MOIC
Venture Debt
Venture debt is a type of debt financing that is specifically designed for high-growth start-ups and emerging companies. Venture debt helps to bridge the gap between equity funding rounds and provides a cash runway for growth. The principal amount is typically repaid at the end of the loan term or in instalments.
Venture debt typically does not dilute the company's ownership, while revenue-based financing does not involve giving up equity or shares in the business.
Range: 2M-100M
Amortization: 2-8years
Pricing: 6-12%
*This information is research for referencing only and does not represent an offer or indication. Market conditions may change and lead to different terms and pricing.
