Options for Non-Equity Required Capital
November 06, 2024
by a searcher from Thunderbird School of Global Management in Salt Lake City, UT, USA
Looking for help learning what options are available to my business if I'm looking for capital without giving up equity? Mezzanine has been suggested - which I know little about. My objective is to infuse capital to further growth organically and through acquisition.
Revenue = +$6MM
EBITDA Margin = 5.19%
from Bentley College in Miami, FL, USA
Mezzanine Financing: As you mentioned, mezzanine financing can be a great option. It’s often structured as a hybrid of debt and equity, where lenders provide capital with higher interest rates than traditional debt but without diluting ownership immediately. Typically, if you meet certain performance targets, there’s no need to give up equity.
Revenue-Based Financing: This approach allows you to repay the capital through a percentage of your revenue. It’s popular with growth-oriented companies because repayments adjust with your income, which can be helpful during slower months.
Term Loans: If you have strong cash flow projections, traditional term loans from banks or alternative lenders can provide the needed capital. Some lenders specialize in acquisition financing and might align well with your growth plans.
Asset-Based Loans: Using existing assets, such as inventory, accounts receivable, or equipment, you can secure capital without giving up equity. This can be a flexible and faster solution.
Invoice Financing: Given your revenue, invoice financing might be worth exploring. It allows you to leverage outstanding invoices as collateral for capital infusions to support growth.
If you’re looking to explore these options further or would like guidance on finding specialized professionals for structuring non-equity financing, DueDilio can help connect you with vetted advisors experienced in M&A and financing solutions tailored for growth-stage businesses like yours.
Here are some articles that may be helpful for you as well:
-- https://www.duedilio.com/the-best-fundraising-platforms-for-business-acquisitions-and-growth/
-- https://www.duedilio.com/top-10-non-dilutive-financing-options-for-business-acquisitions/
from University of Southern California in Los Angeles, CA, USA
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