A first lien term loan is one of the more standard debt structures. First lien term loans are senior secured debt that maintain first right on collateral and first payout position. This debt structure is offered by a broad range of capital providers, and can be paired with numerous other debt types.
A second lien term loan is debt issued to supplement first lien debt that is already in place or is to be issued simultaneously. As the name suggests, second lien debt is second in its rights over the collateral, after first lien debt. But it is still considered secured debt (not to be confused with […]
Designed to supplement limited amounts of first lien debt provided by banks, a first-in-last-out, or FILO loan, maintains a senior secured first priority lien on all assets of the borrower. As the name implies, FILO is the last to be repaid from the proceeds of the collateral, after all first-out bank debt is repaid in […]
Unlike a traditional first lien debt provided by banks, where lenders maintain a senior secured first lien on substantially all assets of a capital seeker, in a bifurcated term loan, the collateral pool is “bifurcated”, such that current assets are typically pledged towards a line of credit provided by a bank, and all non-current assets […]
An Asset Based Line of Credit, or ABL, is a working capital line of credit where the loan amount is governed by the appraised value of one or more assets (a borrowing base). Given this correlation between the loan amount and underlying collateral value, ABLs are considered less risky than cash flow or enterprise value […]
Designed to be a one stop or single tranche solution, a unitrache facility combines a small line of credit with a larger term loan, extended through an acceptable total leverage threshold.
Mezzanine debt is often viewed as a bridge between debt and equity financing. That is because mezzanine loans contain warrants (options), enabling the lender to convert the debt into stock. Even though interest rates are exorbitant (sometimes as high as 20%), this form of capital can be much cheaper than issuing a similar amount of […]
Businesses often fall short on cash flow during extended sales cycles, which provokes the urgent need for capital in order to cover short-term working capital expenses. A Cash Flow Line of Credit is a working capital line of credit that covers the period between the purchasing of raw materials until payment is received from a […]
Identifying and contacting lenders, devising capital structures and pitching the ‘credit story’ of your deal are all time-intensive activities. These often distract from higher-value priorities such as sourcing new opportunities, cultivating operating partnerships and developing existing portfolio companies. Yet borrowers must engage in the necessary legwork if they are to attract lenders and secure favorable […]
The US direct lending market has grown in popularity in recent years, thanks to a shifting regulatory landscape which has prompted borrowers to seek alternatives to traditional bank financing. Direct lending offers a number of advantages over banks for both borrowers and investors in the asset class, but there are also risks to consider. We […]