Growth Capital Loan Terms
Growth Capital Loans are unique and highly customised instruments so loan terms vary widely, but here’s a flavour of what they are.
Size and shape
We agree the size and shape of each loan at the beginning of our discussion with the companies. For us, these are very important criteria as the risk of the loan changes with its shape.
- Size: £2 million to £8 million
- Duration: 24 to 60 months
- Repayment profile: Sometimes including an interest-only period of 12-18 months, then an amortisation period of monthly capital and interest repayments
- Tranching: Growth Capital Loans can be funded in instalments to make the amount more relevant to the funding needs of the companies
- Collateral: secured on all or most assets
- Covenants: none typically.
BOOST&Co and private lending funds making Growth Capital Loans expect returns of 12—20% on their capital, through a combination of loan and equity returns.
- Interest rates: 9-12% on capital outstanding
- Fees: 1-2% of the loan amount
- Equity kicker: 5-15% of the amount lent.
Growth Capital Loans are made up of three basic documents: a debt instrument, an equity kicker document and security document.
- These are standard documents across all such transactions though they can vary markedly across countries in Europe due to local legislation
- Depending on the country where the loan is made, this basic structure may be adapted to fit with the relevant regulations
- In the UK, business loans are documented as loan with debenture and a warrant instrument
- In France, business loans are structured as OBSA (Obligations Ã Bons de Souscriptions d’Actions)
- In Germany, business loans are structured as bonds (Schuldverschreibung) with share options or sometimes phantom shares (Phantomaktien/virtuelle Aktienoptionen).
Growth Capital Loans by BOOST&Co
BOOST&Co has been crafting Growth Capital Loans for more than a dozen years. We have completed more than a 150 lending transactions to SMEs over that time.
If you want to discuss how we can work together to create a Venture Debt solution, get in touch with us. The best way is to give us a call, or to leave us some information about your business.