Non Equity Debt Funding for the Lower Middle Market up to $10 Million!

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10 Reasons Why You Should NOT Give Up Equity If You Don’t Have To

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We can provide up to $10M in non-equity debt funding

We take someone’s $5 million of SBA 7a exposure limit and max that out. Then, we add another conventional note in the pari-passu position for up to an additional $5 million. This way you are funded with non equity debt.

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You will lose control of part of your company with investors and that is just a fact

You will always have to answer to someone if you give up equity in your company, and this might be a very difficult concept for an entrepreneur to swallow. Sometimes freedom was the sole reason they got involved in building a company in the first place and part of this will be taken away. You might not be able to go golfing anymore on a Friday afternoon in the summer because your investors might need to see you in the office doing something to make them money at that time. Sorry. Non equity funding can keep you on the course.

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Investors might only care about rate of return and that’s it

Sometimes investors will have a very short view on the situation because they only intend to be involved in the company for a short period of time. They might demand a certain rate of return, let’s say 10 or 20 percent on their money even though that might not be what is best long term for the company. Not when you go the non equity funding route.

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Debt is a good thing if it can be serviced properly

If there is enough cash coming in to service debt what do you have to worry about? We will always look at past performance of a company to determine debt service so all you have to concern yourself with is managing the company to the best of your ability and the money will be there to pay down the debt sufficiently. Besides, if we feel there is not enough income to service the debt you are seeking, we will not make the loan anyway.

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Diluting your ownership will make it harder to raise future funding

We have seen enough episodes of “Shark Tank” to understand that when you already have a high number of equity shares outstanding it makes it very unappealing for new investors to come into the picture. Then their shares get diluted with others and it can really make the situation messy. Non-equity funding using debt can prevent this problem.

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Diluting capital will make it harder to sell the company in the future

When you have a lot of chefs in the kitchen it always makes it harder to do anything. Especially when you are selling a company because everyone will have their own ideas about value, etc. Because of this, potential buyers may be less interested in buying a company that is more heavily diluted. It is much easier to negotiate with one owner than 10 owners.
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You keep all the profits rather than sharing with investors

This is a no-brainer. When you are the only one, you are the only one you will have to pay. Enough said.

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Equity partners could overthrow the original entrepreneur (it’s happened)

There are horror stories about these take-overs, and we have seen some of these scenarios play-out throughout the years. Remember the guy from “Men’s Warehouse” who was on all the commercials. You haven’t heard him on a commercial lately saying “You’re gonna like the way you look, I Guarantee it”. That’s no coincidence.

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It's stressful if you can’t get along with the investors down the road

It is obvious that when you don’t get along with people or they don’t share the same vision as you for the future there will be stress. This will affect every aspect of your life and could even affect your health. Sometimes, life is too short to get into a situation that could lead to this, so if you have to go into debt to avoid it, maybe it is for the best.

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50% of marriages end up in divorce…this is a lot like a marriage

Partners in business are much like partners in life. You are connected financially in many of the same ways you would be if you were married. If you don’t believe me you just have either never been married or never been in a partnership before. When partnerships fail it can be devastating to all involved much like a divorce. My advice is to think about that before you jump into a partnership and possibly look into alternatives like non-equity debt if it’s feasible to fund your needs.

Oak Brook

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Oak Brook, IL 60523


6859 W. Addison
Chicago, IL 60634


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