Senior Secured Loan
What is it?
- It is a type of loan secured by collateral and is the most senior in payment priority. The amount of borrowing available will depend on the value of the underlying collateral that is securing the loan.
- This type of loan sits at the top of the capital structure and has priority in payment over junior debt and equity holders.
What to expect?
- Senior secured loans typically have a maturity of three to five years as well as an amortizing principal payment schedule.
- Borrowers must be aware of the key metrics that lenders look for before taking on the loan. Some of these key metrics include, but not limited to, the following: D/E ratio D/EBITDA ratio caps (depending on markets).
- Most senior secured loans do not have redemption and call protection provisions in the contract.
- This type of loan is also the lowest priced compared to other types of financing.
Who should consider
- Companies who have history of positive income and cash flows as well as leverage ratios that are below industry averages.
- Companies that have free and unencumbered collateral, typically real estate, that can be pledged to the lender.
How Can Bayfront Help
Strategy Review
Detailed analysis of the Client and advise on value-adding corporate strategies.
Structuring
Detailed analysis of the Client’s capital structure and advise on the optimal proportion of equity and debt.
Deal Execution Management
Assisting in execution of deal processes, most commonly in the form of capital raising.
Information Memorandum
For presenting to different target audience such as lenders, new sales relationships, new client relationships.
Governance Review
To determine the specific governance needs of a company and assist in areas which would minimize risks and help achieve business goals.
