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Debt Financing

Debt financing is an alternative source of capital for small growing companies and it is critical to start the process of looking for debt funding early and not wait until you are in a real cash-flow crunch, because you will lose your negotiating leverage and weaken your company’s financial position, a major turn-off to most commercial lenders.

How debt financing works

The maximum debt capacity that a small growing business will ultimately be able to handle will usually involve balancing the costs and risks of defaulting on a loan against the owners’ and managers’ desire to maintain control. 


If your business plan and cash-flow projections reveal that making loan payments will strain your company’s financial condition (or that you don’t have sufficient collateral), then you should explore equity alternatives. It’s simply not worth driving your company into bankruptcy solely to maintain maximum ownership and control. 

You should also compare the level of debt financing you are planning to obtain against the typical ratios for businesses in your industry. Once you’ve figured out your optimum debt-to-equity ratio, you can look into the sources of debt financing, and the business and legal issues involved in borrowing funds from a commercial lender. 

A proper debt-to-equity ratio for your business will depend on a wide variety of factors, including: 

The impact that your obligation to make payments under the loan will have on the cash flow of your business,  

Your costs relating to obtaining the loan, 

Your need for flexibility in the capital structure so you can respond to changing economic or market conditions, 

Your access to alternative sources of financing, 

The nature and extent of your company’s assets (tangible or intangible) that are available as collateral, 

The level of dilution of ownership and control that your shareholders (and managers) are willing to tolerate, 

Certain tax considerations (interest payments are a deductible expense, but dividends are not).

 Types of Debt Financing

Short-term loans

These are ordinarily used for a specific purpose with the expectation by the lender that the loan will be repaid at the end of the project. A short-term loan is usually made in the form of a promissory note payable on demand. It may be secured by the inventory or accounts receivable that the loan is designed to cover, or it may be unsecured (that is, no collateral is required).

Operating lines of credit

Lines of credit consist of a specific amount of debt that is made available to a company on an “as needed” basis over a specified period of time. A line of credit may be short term (60 to 120 days) or intermediate term (one to three years), renewable or nonrenewable, and at a fixed or fluctuating rate of interest.

Intermediate-term loans

These loans are usually provided over a three to five year period for the purposes of acquiring equipment, fixtures, furniture, and supplies,expanding existing facilities, acquiring another business, or providing working capital. The debt is almost always secured, not only by the assets being purchased with the loan proceeds but also by the company’s other assets, such as inventory, accounts receivable, equipment, and real estate.

Long-term loans

These are generally extended for specific, highly secured transactions, such as the purchase of real estate or a multiuse business facility, in which case a lender will consider extending a long-term loan to a small company for 65 to 80 percent of the appraised value of the land or building.

Letters of credit

These are issued by commercial banks, solely in connection with international sales transactions to expedite the shipping and payment process. In a typical letter-of-credit scenario, the seller demands that payment be made in the form of a letter of credit, and the buyer must then make arrangements with its bank to issue the letter of credit.

FAqs

a) What constitutes a good loan proposal?

A good loan proposal should include; 

Summary of the request; This is an overview of the history of the company, the amount of capital needed, the proposed repayment terms, the intended use of the loan, and the collateral available to secure the debt. 

Borrower’s history; This is a brief background of your company, finance structure, founders, stage of development and growth plans which may include; a list of your customers,suppliers, and service providers,management structure and philosophy, your main products and services, and an overview of any intellectual property you own or have developed. 

Market data; This is an overview of trends in your business industry, the size of the market, your market share, an assessment of the competition, your sustainable competitive advantages, marketing, public relations, and advertising strategies, market research studies, and relevant future trends in your industry. 

Financial information; This includes financial statements (best case/expected case/worst case), federal and state tax returns, company valuations or appraisals of key assets, current balance sheet, credit references, and a two-year income statement. 

Schedules and exhibits; This should include certain key documents, such as agreements with strategic vendors or customers,insurance policies, leases, and employment agreements, to be attached as exhibits. 


b) What may cause rejection of my loan proposal?

Your loan proposal may get rejected if it shows;

Unrealistically low business expense forecasts, 

Lack of a properly completed loan proposal,  

Inability to take constructive criticism, 

Underestimated financial requirements Little or no experience in the business industry, 

Overstated company revenue projections, 

Attempts to pit one lender against another, 

Lack of adequate debt collateral,

Poor communication skills,  

Cash-flow projections that do not demonstrate an ability to repay the debt, 

Cash-flow projections without adequate supporting documentation,  

Lack of understanding of the loan proposal and approval process.


c) Do we offer debt financing?

One of our unique market niches is USA and International project debt financing, ranging from USD $1M minimum to USD $1B or more. We serve through our mission to be a catalyst to help our clients get timely funding.


d) What are our commercial loan terms?

Funding Amounts: Minimum loan amount is USD $1 million in the USA and USD $2M minimum for International project financing with no maximum loan amount. 

Geographic Area: North America, South America, Caribbean, Western/Eastern Europe, Australia/New Zealand, Korea, Japan, Taiwan, Malaysia, Indonesia and other select USA-friendly locations worldwide 

Funding Types: New development, acquisition and refinance. 

Loan Terms: to be determined by property type, loan amount and findings during formal underwriting. Possible loan terms include: 5-10 year term loans amortized over 10, 20, 25 or 30 years; 15-30 year term loans amortized over 15, 20 or 30 years. 

Interest Rates: rates are calculated from cost of funds against LIBOR, Prime or Treasury rates. This is determined based on property type, loan amount and findings during formal underwriting. Ranges are estimated between 6% - 8% with no pre-payment penalties after 24 months. 

Loan to Value: Up to 80% depending on property type, loan amount and other factors; this also could include up to 70% of "completed value", which could mean up to 100% of costs. 

Debt Service Coverage Ratio (NOI/debt service): minimum 1.25x, varies by property type.

Recourse/Non Recourse: can only be determined through formal underwriting. 


e). What types of properties do we finance? 

We offer financing for all types of commercial real estate including: hotel resorts and casinos; alternative energy (solar, wind, geothermal, hydro, biomass, waste conversion, etc.); office, mixed-use, assisted living, multifamily, retail, industrial, medical/ dental; public-use facilities; infrastructure (highway, rail, bridges, roads, etc.); recreational facilities, storage/warehouses, etc. 


f). We also offer financing for large projects such as; 

Alternative Energy: including Oil, Gas, Wind and Solar, Any newly formed proprietary patented technology that is tested and verified, and Water

Real Estate: acquisition and development; 5-units and higher; commercial 

Services: senior living (assisted living with FULL medical infrastructure/support included), Hospital, Nursing Homes, Medical retreat facilities, R&D Labs, Water treatment, and reclamation /recycling

Products: which include medical, commercial invention (on a qualified basis), Textiles, Agricultural, Health Products, etc. 

Business Financing: based on a review and qualification, certain project types not listed or related may be qualified for finance. 

Note: project simply has to qualify for and clear underwriting and due diligence process. The minimum request amount we accept for large projects is USD $3M to USD $500M+.

DISCLAIMER

Myhelpfund.com: is a referral and consulting services business. We are not Certified Financial Advisers, U. S. Securities Dealer, Stock Broker or Investment Adviser. We are not business consultants and acting in the capacity of a financial intermediary who provides advice to private individuals on or about business matters. .Please understand that the contemplated transaction(s) is strictly private and in no way relates to the United States securities act of 1933 **(THE”ACT”)* http://sblcfinancing.com/assets/sa33.pdf and does not involve the sale of registered securities. This transaction(s) are private and exempt from the act. Each investor associated in any way, directly or indirectly with myhelpfund.com as a potential funding resource must be an "Accredited Investor" as that term is used in federal and state securities laws. Myhelpfund.com provides a service through which clients and investors/lenders may identify each other but makes no actual or implied representations concerning the availability of any potential funding or funding resource. Myhelpfund.com neither effects nor attempts to affect any funding or business relationship between clients and any associated in any way, directly or indirectly investor or lender, and nothing contained in these services offering material should be construed as an offer to sell or the solicitation of an offer to purchase a security. Clients and Investors/Lenders associated in any way, directly or indirectly with myhelpfund.com are solely responsible for compliance of such federal, state, tax or local laws which may apply between them in any funding transaction and (clients) of myhelpfund.com are solely responsible to verify all funding contacts credentials by doing due diligence themselves. myhelpfund.com is not responsible for any problems or conflicts between clients of myhelpfund.com and any funding contacts. Myhelpfund.com does not provide legal, financial or tax advice of any kind. If you have any questions with respect to legal, financial or tax matters relevant to your interactions with myhelpfund.com funding contacts/clients, you should consult a professional adviser. Most early-stage businesses and many other growth-focused businesses fail, and if you invest in a business as a direct or indirect result of myhelpfund.com it is significantly more likely that you will lose all of your invested capital than you will see any return of capital or a profit. You should only invest in businesses that you can afford to lose without altering your standard of living. Myhelpfund.com receives compensation of fees charged on funding that has been accepted and received by the clients. All up front fees paid to our referral partners through their website or by other means are subject to their own terms and myhelpfund.com shall not be held liable for the same. All clients' information and funding transactions positive or negative are held in complete confidentiality and no information will ever be shared outside of our funding network or sold and no clients will ever be used as a reference or referral to any future potential funding seekers considering joining myhelpfund.com.

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