Corporate Loans

A term loan is a monetary loan that is repaid in regular payments over a set period of time. Interest rate may be fixed or floating.

• Purpose: Expansion, dividends, buyouts, refinancings, etc.
• Typical Collateral: All asset lien, real estate, equipment, other fixed assets
• Term: 1 – 10 years
• Amortization: 3-7 years
• Grace period (interest only): 6-12 months
• Pricing: Prime rate plus 0%-2%
• Loan size: $1 Million to $100+ Million

A Line Of Credit (‘LOC’) is a preset amount of money that a lender has agreed to lend a borrower. The borrower can draw from the line of credit when it needs cash, up to the maximum amount. In a Revolver LOC, money can be borrowed again after it was repaid. Interest is charged only on the amount borrowed.

• Purpose: Working capital (inventory, receivables), cash flow management, etc.
• Typical Collateral: All asset lien, inventory, receivables
• Term: 1 year (renewable)
• Amortization: none
• Interest: Monthly
• Pricing: Prime rate plus 0%-2%
• LOC size: $1 Million to $100+ Million

A bridge loan is a short-term loan used until the business secures permanent financing, sells an asset, or removes an existing obligation. It allows the borrower to meet current obligations by providing immediate cash flow. Bridge loans are short term, have relatively high interest rates and fees, and are usually backed by some form of collateral.

• Purpose: Temporary finance
• Typical Collateral: Real estate, inventory
• Term: Up to 3 years
• Amortization: none
• Grace period (interest only): 6-12 months
• Pricing: Prime rate plus 3%-6%
• Loan size: $1 Million to $100+ Million

Factoring is a financial transaction in which a business sells its accounts receivables to a third party (called a factor) at a discount. Businesses use factoring as short-term borrowing in order to meet immediate cash needs. Factors often charge higher interest rate and require more documentation and administrative work (e.g. assigning invoices, informing customers of the factoring arrangement) than Line of Credit (‘LOC’) financing. Therefore, the loan marketplace platform will also try to match factoring borrowers with Line of Credit funding solutions.

• Purpose: Short-term borrowing, cash flow management
• Typical Collateral: All asset lien, receivables sale
• Term: 1 year (renewable)
• Amortization: none
• Interest: Discount at inception
• Pricing: 10%-15%
• LOC size: $1 Million to $100+ Million

Leasing is financing arrangement in which one party (‘lessee’) agrees to rent property owned by another party (‘lessor’). It guarantees the lessee use of an asset and guarantees the lessor regular payments for a specified period in exchange. In a Leasing transaction the lessor owns the asset, which reduces lending risk, and also reduces lessor’s tax liability through depreciation expense. These benefits are transferred to the borrower through lower interest rate.

• Purpose: Equipment and real estate financing
• Typical Collateral: Lessor is the owner of the asset
• Term: 3 – 30 years
• Amortization: 3 – 30 years
• Interest: Monthly
• Pricing: Varies
• LOC size: $1 Million to $100+ Million

A property is considered owner-occupied when 51% or more of the property’s space is occupied by the owner’s business, and the owner pays at least 51% of the rent. The collateral for owner-occupied loans is the real estate. The loan is repaid with cash flow generated by the business operations, and rent collected from other tenants.

Lenders consider owner-occupied loans as lower risk, because the owner is committed to the property, both as the landlord and a major occupant, and because the business’s cash flows support debt service payments.

• Purpose: Acquisition, expansion, dividends, buyouts, refinancings, etc.
• Typical Collateral: First mortgage on the commercial property
• Term: 5 – 20 years
• Amortization: 15-25 years
• Grace period (interest only): None
• Pricing: Prime rate plus or minus 0%-2%
• Loan size: $1 Million to $100+ Million