What is a Seller Note?
Have a Question? Ask your Question below! One of our investors or advisors will answer. A seller’s note receivable is an alternative form of business capital. This type of debt financing is often used in small business acquisitions, where the seller agrees to...Business Financing Live Event
One of the hardest parts about starting a new business is finances. How do you get the business financing you need? Which option is the best for your business? How do you handle those finances responsibly? What’s a P&L statement? If you’re thinking of...
Working Capital vs. Change in Working Capital
Have a Question? Ask your question below and one of our Advisors will answer. There is a significant difference between “working capital” and “change in working capital.” Working capital is a snapshot of a moment in time that measures the level of assets a business...
Subordinated Debt
Subordinated debt (sometimes also referred to as a subordinated loan, junior debt, subordinated bond, or subordinated debenture) is a debt that ranks below other, regular debt on a company’s balance sheet. In the event the company faces bankruptcy or liquidation,...
Asset-Based Lending
An asset-based loan (also sometimes called “asset-based financing” or “commercial finance”) is a type of business financing secured by an asset (or multiple assets) of the company. Often, these loans are structured to function like revolving lines of credit, allowing...
Raising Capital: Understanding the Options for Your Business
There are several types of loans available to business owners — so many, in fact, that the options can seem overwhelming and confusing, especially to smaller business owners without a lot of experience raising capital. This guide will help educate you on the options so you can make a more informed decision about financing your growing business while limiting added risk.
Mezzanine Debt Definition
In its purest form, Mezzanine Debt is a business debt instrument that carries along with it certain rights to convert debt into equity (stock, common shares, partnership interests, LLC membership units, etc.). Mezzanine debt financing is not a pure debt or a pure equity instrument. It is something in the middle. In fact, the word ‘mezzanine’ is derived from the Italian word ‘mezzano’, meaning middle, and is used to describe how this particular form of business capital combines elements of both debt and equity financing into one instrument.
Small Business Loans: Is It the Right Time to Refinance?
Unfortunately, owning a business does not make someone an expert in financing. The lenders are the ones who know the ins and outs of rates and terms and documents. To even out the playing field, it is important for a small business owner to ask the right questions and consider the following factors when deciding whether to refinance:
![How to Calculate Debt Service Coverage Ratio [Tool]](https://exitpromise.com/wp-content/uploads/2017/02/iStock-502733644.jpg)
How to Calculate Debt Service Coverage Ratio [Tool]
Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.
What is a Debt Service Coverage Ratio?
The debt service coverage ratio is a measurement used by lenders to determine if a business is able to meet its debt servicing obligations through its operating income during a given period of time. In most cases, a lender wants the operating income to exceed the debt servicing costs by some measure. This ratio defines the extent to which a business’s operating income (or other defined measure of cash flow) exceeds the cost to service its bank loans.
What Happens to Debt When Selling a Business?
Many business owners are under the wrong impression that their business debt will disappear when their business is sold. In some cases, the debt is absorbed or is assumed by the buyer. But usually this is not the case.
Definition of Alternative Business Capital
Entrepreneurs often face the need for alternative sources of business capital to traditional bank financing but are often unable to find them. Similarly, they can find themselves at a loss to understand how this form of capital differs from traditional bank...
What is a Bank Workout Group?
The Bank Workout Group is a department in a bank that handles what is known as the bank’s special assets. Banks send their troubled loans to this department to handle negotiation and management of the bank’s forbearance agreements.
No Good Deed Goes Unpunished (in the Boardroom)
As we gathered last week, instead of receiving the financial documentation we were promised, we were all relieved of our duties. Isn’t that a nice way to say “you’re fired”?
Kauffman Foundation Venture Capital Report: Will VC Be Your Super Hero?
I continue to be surprised as I meet with entrepreneurs who truly regard Venture Capital as their Holy Grail. It’s as though they are looking for a Super Hero to make their dreams of entrepreneurial success come true. But having spent more than a few sessions on the entrepreneur’s side of the table in negotiations with venture capital firms, I know better. And it seems there are others who share my opinion!
“It’s Not About You!” & Other Hard Lessons for the Entrepreneur
Not long ago, one of my dear friends abruptly stated “it’s not about you” after patiently listening to my long story about a business relationship which changed, without warning. I just love this friend and how she was able to candidly share her observation which has proven to be brilliant and incredibly powerful.
This Too Shall Pass: One Entrepreneur’s Battle Cry
Working with successful entrepreneurs who are dedicated to growing and selling a valuable business offers me the opportunity to learn from the best. I pinch myself most days as I am invited into the lives of my clients and have the privilege of experiencing the ups and downs of entrepreneurship. Truly, it is my pleasure!
Bank Alternatives: Sourcing Business Capital When a Company is Not Bankable
Often entrepreneurs find themselves in a situation where their commercial bank considers their existing line of credit too risky to extend or renew. This places the entrepreneur and their banker at odds, and many times pushes the business owner to take drastic steps to keep their company’s doors open and paychecks coming. Has this happened to you or one of your fellow entrepreneurs?
Pivoting Your Business When Using Loan Alternatives
Many people discuss the importance of pivoting in the context of a startup business. And I agree, once a business launches, the entrepreneur must be mindful of what is working and what is not. That’s when it is time to pivot the startup.
