Senior / Bank Debt

Senior / Bank Debt

Senior debt is a cost-effective, anti-dilutive alternative to raising additional equity from outside sources.  It is typically secured by taking a first position lien on all the assets of the Company and may be structured as a term loan or a revolving line of credit.  Transaction sizes range from $500,000 – $20,000,000  Senior debt facilities may be used to assist in the growth of the Company, restructure the Company’s balance sheet to increase debt capacity, or as a means to consolidate and restructure currently existing debt facilities to increase cash flow.  Culver Capital Advisors can aid in the placing of senior debt through any one of our numerous sources of capital.

Senior bank lines provide businesses access to vital capital to be used for growth, capital expenditures, operational expenditures, and strategic acquisitions.  It is a cost-effective, anti-dilutive alternative to raising additional equity from outside sources.  Senior debt facilities may also be used to restructure the Company’s balance sheet to increase debt capacity, or as a means to consolidate and restructure currently existing debt facilities to increase cash flow.  Culver Capital Advisors can aid in the placing of senior debt through any one of our numerous sources of capital.

Transaction size/structure:

Senior debt is commonly structured as either a term loan or revolving line of credit; and often times is structured as a combination of both.  Transaction sizes range from $500,000 to $50,000,000 and usually include a first-position lien on all of the assets of the company.  In addition, some percentage of warrant coverage is required

Term loan:

  • 3 – 5 year term
  • Fully amortizing
  • Warrant coverage between 3% – 7%

Revolving line of credit:

  • 12 month term
  • Up to 90% advance on accounts receivable
  • Up to 50% advance on inventory

The senior lender also looks to secure the banking relationship with the client by overseeing its depository accounts, accounts receivable, and business merchant accounts.

Criteria:

Company’s that qualify for a senior bank facility will be investment-grade businesses with a strong income statement and healthy balance sheet.  They are typically more mature company’s that are generating positive net income and positive cash flow.  These companies can span across a very broad range of industries.  The overall decision for approving these deals is based on the company’s financial strength and ability to service its existing and new debt.

Senior debt facilities are a much less expensive source of debt financing for those companies that qualify, and can be used to satisfy any number of the businesses financial requirements.