Subordinated Debt Benefits:

• Relatively less loss of ownership through warrants
• Less expensive financing option: costs more than senior bank debt but less than equity financing.
• More flexible than a term loan
• Unlikely there will be management advisors.
• Ability to leverage company’s assets beyond traditional lending
• Financial controls and disciplines may be mandated to manage your future growth

When is Subordinated Debt Used?

• Management Buyouts
• Fast Growth
• Intangible Asset Purchases
• Acquisition
• Corporate Re-capitalizations to fund a buyout

Is Subordinated Debt for you?

• Current cash flow strong
• Business has assets that can be financed (invoices, accounts receivable, contracts, intellectual property, patents, etc.)
• Strong earnings history
• High growth business model
• Free from current performance obligations
• Maintain solid books, records and financial controls?
• Need short term capital - one to four years