Growth companies either have reliable historical revenue streams and strong future potential revenue, along with a positive and building business trend. The reliability and repeatability of profitable operations through organic growth or via acquisition depends upon management, the business, and the industry. When these key factors are in alignment, the ongoing cash flow and profits are a financeable asset, particularly in conjunction with tangible short and long-term assets such as receivables, inventory, equipment, property, and buildings.

Lenders' criteria, appetite, and loan pricing can vary widely, particularly between banks, non-bank, and private debt lenders. Different lenders apply unique risk and opportunity criteria to assess management capability, business plans, business growth potential, venture debt, and acquisition debt. Some lenders specialize in specific sectors and deal size.

Growth Financing – Common challenges: 

• Negative cash flow
• Heavy equipment and capital expenditures
• Not enough working capital
• Losses
• Thin margins
• Industry
• Lack of enduring, repeatable revenue
• Growing accounts receivables and inventory
• Not enough equity 
• Lack of history
• Customer profile and/or concentration 
• High fixed expenses
• Lack of detailed financial forecasts
• Intangible assets

Solution

Growth financing is challenging on a short to long term basis. The business strategy connection to the financing strategy requires in-depth analysis and packaging of detailed financial forecasts that articulate business growth goals,  plans and tactics, the application of funds, the return on investment in conjunction with cash flow ability to service debt and repay loans. Sensitivity analysis is applied to measure risk and define stress tests. There are specialized lenders that focus on growth companies and place greater reliance on future business plans and financial forecasts over historical performance. 

We connect the business strategy to the financing requirements and identify the options to best-case financing structure, the cost of financing,  most suitable lender(s). Building a lending case, we draw on our previous experience within this financing class and drill down into the details to ensure alignment with each prospective lender and solution.

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