Commercial Loan Types
Middle Market Financing Simplified
At Cerebro Capital, we’ve created an all-in-one loan management platform that’s transforming the way borrowers and lenders source and manage their loans. We continue to develop a single-source marketplace and integrated software solutions for a diverse network of lenders and borrowers. There are various types of commercial loans potentially available to borrowers utilizing Cerebro’s Credit Explorer:
Cerebro Borrower Profile
- Revenues over $5 million
- U.S. based companies
- Loan sizes over $2 million
If you’re a mid-sized U.S.-based organization or an enterprise-level company looking for new corporate loans or refinancing, Cerebro Capital can help. Our Lender Network is industry agnostic* and our diverse client base includes organizations across many industries.
- Technology
- Healthcare
- Manufacturers
- Services
- Food & Beverage
- Education
- Oil & gas
- Gov't Contractors
- Cerebro does not currently support investment real estate deals, project financing, startups seeking seed capital or pure equity transactions.
Identifying Commercial Loan Structures
Normally CEOs and CFOs don’t have time to parse through every structural difference in the types of commercial loans available. Cerebro Capital’s Credit Explorer takes the guesswork out of loan sourcing by pairing our borrowers with lenders whose risk profiles match the borrower’s unique funding needs and offering an experienced transactions team to help identify the best options. Below lists some of the specialty financing and loan types that corporate borrowers can receive through Cerebro.
Please note the term ranges below are based on recent deals that have been sourced through Cerebro and do not represent the entire range of structures, pricing, or possibilities that Cerebro’s lender network can provide. Lenders offer new structures and terms each day as the market changes.
A term loan is a loan for a particular amount with standardized repayment terms and a fixed interest rate.
Purpose: Expansion, dividends, buyouts, refinancings, etc.
Typical Collateral: All asset lien, real estate, equipment, other fixed assets
Amortization: 3 to 7 years
Term: 3 to 5 years
Interest only period: 6 months to 1 year
Pricing: Libor + 2.5% to 9%
Loan size: $2MM to $100MM+
A delayed draw term loan is similar to a term loan but features a provision that the borrower can draw certain amounts of the loan at mutually agreed upon times or mutually agreed upon milestones.
Purpose: Expansion, dividends, buyouts, refinancings, etc.
Typical Collateral: All asset lien, real estate, equipment, other fixed assets
Amortization: 3 to 7 years
Term: 3 to 5 years
Interest only period: 6 months to 1 year
Pricing: Libor + 2.5% to 9%
Loan size: $1MM to $100MM+
A term loan where the lender holds a secondary interest in the assets of the borrower. The interests of the second lien term lenders are secondary to those of first lien lenders.
Purpose: Expansion, dividends, buyouts, refinancings, etc.
Typical Collateral: second lien against all assets
Amortization: 1% per year
Term: 3 to 4 years
Pricing: Libor + 8% to 18%
Loan size: $2MM to $100MM+
A line of credit is an agreed sum between a financial institution (e.g., a bank) and the borrower that .can be redrawn once paid back.
Purpose: Short term working capital.
Typical Collateral: A/R, Inventory, and other working capital assets of the borrower
Pricing: Libor + 2% to 7%
Loan size: $1MM to $100MM+
This is a line of credit where the line can be redrawn once paid back.
Purpose: Short term working capital.
Typical Collateral: A/R, Inventory, and other working capital assets of the borrower
Pricing: Libor + 2% to 7%
Loan size: $1MM to $100MM+
Venture debt is financing provided to venture-backed organizations that are early in their life cycle and typically burning cash.
Purpose: Expansion, growth capital
Typical Collateral: All asset lien, A/R, IP, other fixed assets
Amortization: 3 to 5 years
Term: 3 to 5 years
Interest only period: 6 to 12 months
Pricing: Libor + 5% to 15%
Loan size: $1MM to $10MM+
Structures: Line of Credit, Term Loan, Royalty based line
Typically a mortgage that’s secured by types of commercial property such as industrial, retail, or office buildings that are used in the day to day operations of the borrowers business.
Purpose: Refinancing, business acquisition or expansion.
Typical Collateral: Real estate, fixtures and equipment
Amortization: 3 to 30 years
Term: 3 to 10 years
Interest only period: 6 months to 2 years
Pricing: Fixed rate between 4% – 10%
Loan size: $1MM to $100MM+
The Main Street Lending Program provides regulated banks a funding facility to extend unsecured loans that are not federally guaranteed, but instead are sold to the Federal Reserve via a 95% participation. Program expires December 31st, 2020.
Acquisition financing uses capital, typically in the form of a line of credit or loan. The borrower raises and then uses the capital to acquire another business.
Purpose: Acquisition
Cash Equity: 5% to 30%
Typical Collateral: All asset lien, real estate, equipment, other fixed assets
Amortization: 3 to 5 years
Term: 3 to 5 years
Interest only period: 6 months to 2 years
Pricing: Libor + 2.5% to 9%
Loan size: $1MM to $100MM+
SBA loans are government insured and allow lenders to provide capital when there is a collateral or cash flow shortfall, or limited operating history.
Purpose: Partner Buyouts, Working capital, and Expansion projects.
Typical Collateral: All asset lien of the borrower and personal guarantees from owners with more than 20% equity interest in the borrower
Pricing: Up to Prime + 2.75% (max permitted pricing)
SBA 7a Loan size: Up to $5MM
SBA 504 Loan size: Up to $25MM
SBA acquisition loans area type of commercial loan that is government insured and allows lenders to provide capital when there is a collateral or cash flow shortfall.
Purpose: Buyouts
Required Cash Equity: 5% to 20%
Typical Collateral: All asset lien of the borrower and personal guarantees from owners with more than 20% equity interest in the borrower
Pricing: Up to Prime + 2.75% (max permitted pricing)
SBA 7a Loan size: Up to $5MM
SBA 504 Loan size: Up to $25MM
This is a line of credit business loan that’s secured by company collateral, such as product inventory, machinery, and more.
Purpose: Working capital
Typical Collateral: A/R and Inventory
Amortization: None – revolving line of credit
Term: 2 to 5 years
Pricing: Libor + 2% to 15%
Loan size: subject to borrowing base – $1MM to $100MM+
Specific financing that uses a borrower’s account receivables to establish funding.
Purpose: Working capital
Typical Collateral: A/R
Amortization: None – revolving line of credit
Term: 2 to 5 years
Pricing: Libor + 2% to 15%
Loan size: subject to borrowing base – $1MM to $100MM+
An asset-backed, revolving line of credit, may also be a short-term loan, used specifically for the purchase of inventory. The inventory acts as the collateral for the loan.
Purpose: Working capital
Typical Collateral: Inventory
Amortization: None – revolving line of credit
Term: 2 to 5 years
Pricing: Libor + 2% to 15%
Loan size: subject to borrowing base – $1MM to $50MM
An asset-backed loan, used specifically for the purchase of business equipment.
Purpose: Purchase, repair or replace business equipment
Typical Collateral: Equipment
Amortization: Yes – depends on equipment
Term: 2 to 10 years
Pricing: 4% – 9%+ based on borrower qualifications
Advance Rate: 80-100% financing on equipment value
Loan size: subject to borrowing base – $1MM to $50MM
The USDA Rural Development Business & Industry CARES Act program provides working capital to help rural businesses prevent, prepare for or respond to the effects of the coronavirus pandemic. This program is authorized by the Consolidated Farm and Rural Development Act and the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Loans may be used only to support rural businesses, including agricultural producers, that were in operation on Feb. 15, 2020.
Do you know which commercial loan type is right for your company?
We can help. Schedule your complimentary analysis with our experienced team today.
- info@cerebrocapital.com
-
12 W Madison St.
Baltimore, MD 21201