The right funding partner for your next stage

Scenario: The owner's family has run this business for more than 60 years. A few years ago she was refinanced into a 10-year, floating-rate SBA 7(a) loan when an SBA 504 loan fit her better. COVID and supply chain problems slowed her recovery, cash flow went negative, and she took out three merchant cash advances that ate her profit.

Solution: Our capital partner took the first-loss position alongside a bank to refinance her into an SBA 504 loan. Separate facilities on her receivables, her equipment and her product orders replaced the cash advances and cut her finance costs in half.

Scenario: The company had no debt until its largest client changed how it billed. To cover the gap it took four merchant cash advances, and within six months they had absorbed its entire profit for the year. It needed $5 million to get out.

Solution: Our capital partner built several facilities at once: a $1.4 million mortgage on the company's real estate, a line of credit of up to $5 million on its receivables (with room to reach $10 million after two quarters), and a $5 million purchase order facility to buy finished goods. A standby letter of credit helped it win better terms from its suppliers.

Scenario: A mature distributor of materials and construction services had several general contractor projects stall in bad weather. Payments came late, cash got tight, and the company tripped its covenants with its regional bank.

Solution: Our capital partner issued a standby letter of credit backed by its own balance sheet. It gave the bank another layer of collateral, guaranteed the shortfall within one year, and gave the company stronger credit to negotiate better contracts. The partner also helped it find new suppliers and win new work.

Scenario: A long-time regional staffing agency averaging $80 to $85 million in revenue had a term loan and a line of credit with four years left. When its highest-margin placements dropped off, it missed a covenant.

Solution: The company was resizing, not failing, and still ran a 40% operating margin. Our capital partner replaced the line of credit on the same borrowing base, provided the bank held its term loan in second position for one year. A letter of credit guaranteed the bank's term loan would be paid off within that year.

Scenario: An outsourced CFO made the introduction. The company had three straight years of rising revenue but flat profit through an operational change. Once it fixed the inefficiencies, it won large contracts worth $15 million or more in new annual revenue and needed far more working capital than its lender would give.

Solution: Our capital partner built a structure across four facilities: a revolving line on receivables, trade finance, letters of credit for its suppliers, and a junior term loan that grows as the company hits set revenue and EBITDA targets. It gave the company credibility with suppliers and a benchmark for its valuation.

Scenario: A third-generation family investment group buys family-founded manufacturers. Its latest purchase was a custom sheet metal shop in industrial HVAC with more than $20 million in revenue and $4.5 million in EBITDA. The shop had few hard assets to borrow against for its size, and the family could not sign a personal guarantee.

Solution: Our capital partner led a structure across three facilities: receivables, equipment, and a standby letter of credit guaranteeing the seller note. A regional bank was the better fit for the term loan, so the partner signed an intercreditor agreement with the bank, with its letter of credit as the backstop.

Scenario: A bridge lender referred the owner, who needed out of an 18% bridge loan of about $1.9 million on a 20-unit building in a strong suburban market. He had bought it a year earlier and needed better occupancy and some capital work.

Solution: The owner was an experienced local operator. Our capital partner refinanced at 50% loan-to-value, as he asked. The deal was close to bankable, so a regional bank joined the loan.

Scenario: Two apartments over first-floor retail. The owner bought it in 2021 for $2.26 million, put about $200,000 into it, and it's now worth $3.9 million. She had a strong business and steady cash, but a nick on her credit kept her out of a conventional loan, and her bridge loan was coming due.

Solution: Our capital partner made a 30-year loan of $1.8 million, priced a little below SBA 7(a) rates.

Scenario: The buyers were buying a 34,000-square-foot plaza built in the mid-1980s. Occupancy was low, operations were loose, and it needed a light refresh. The bank said no because they had bought another property less than 60 days earlier and their balance sheet was thin. They went looking for a bridge loan.

Solution: In place of a bridge loan, our capital partner made a 30-year loan at 70% of cost, with the option to buy the prepayment penalty down to one year. That gives them years to refinance or sell instead of months. If the value-add plan works, they can refinance into a 30-year loan 3.5 to 4 points cheaper.

Scenario: An experienced developer and operator needed to refinance a medical office building to buy out a partner. He expected a life insurance company loan, but they showed little interest, most likely because the building sits in a weaker part of a second-tier metro.

Solution: Our capital partner made a $29 million, five-year loan on near-conventional terms and brought in a regional bank to share it. His blended rate landed just above the conventional market.

Scenario: A seasoned grocery store owner had a $32 million bank loan coming due, and the bank wouldn't extend it. Other banks passed, debt funds were too expensive, and the owner didn't want the securitized loan offered. The banker who made the original loan sent them our partner's way.

Solution: Our capital partner offered two paths while the owner chose an exit: a five-year, near-conventional loan with a bank sharing it, or a shorter bridge. The owner chose to sell within two years, so the partner made a one-year loan with two extensions, at a better rate and with more room than a typical bridge loan.

Scenario: A five-unit office building, fully occupied. Taxes and insurance had jumped in a year and squeezed its income, and four tenants were on below-market leases for three more years.

Solution: No bank would take it, and a bridge loan carried too much risk at maturity. Our capital partner made a five-year mini-permanent loan at 60% of cost to carry it until the leases roll.