Creative loan structuring is one of The Business Development Company’s key strengths. For example, we have the flexibility to provide borrowers the option of an initial interest-only period in cases where the business needs time to build momentum before beginning repayment. Also, we can provide tiered loans whereby funding is staged in such a way that the immediate need is supported and additional funds are available in the future provided established targets are met. Whatever the deal may look like, our solution will usually be made up of the following types of funding.
- Term loans finance an immediate need and are typically repaid in 5-7 years from operating cash flow. Term loans are most frequently used to fund equipment purchases, growth capital, restructuring debt (e.g. paying down a Line of Credit) and acquisitions.
- SBA Term Loans carry a guaranty by the U.S. government in an amount that ranges from 50% to 75% of the loan amount. As an SBA approved lender, the SBA guaranty partially mitigates our risk of loss and interest rate pricing and fees are competitive.
- A Line of Credit typically supports short term working capital needs often resulting from the timing of receivables collections, inventory purchases and vendor payments. The facility revolves (one can borrow, repay & re-borrow) and is most often the appropriate structure for growing, seasonal and cyclical businesses. In most cases, Line of Credit availability is tied to a formula driven by eligible accounts receivable and inventory.