Business Financing & Debt Advisory
Most founders don’t get burned by debt itself — they get burned by debt they didn’t understand. A “1.4 factor rate” sounds smaller than “40% interest,” but it’s often worse. A line of credit feels flexible until the bank cuts it in half the quarter you need it most. Before you sign anything, you want someone in your corner who reads these deals for a living. That’s what we do: we help you decide whether to raise debt at all, what kind, and whether the terms you’ve been offered are actually fair.
Should You Even Take On Debt?
Debt is a tool, not a verdict on your business. Used right, it funds growth you couldn’t self-finance and is far cheaper than giving up equity. Used wrong, it’s a fixed cost that doesn’t care how your month went.
The honest test: debt makes sense when it funds something that generates a return greater than its cost, and when you can service the payments even in a bad quarter. If you’re borrowing to cover a hole rather than fund a return, that’s a signal to fix the underlying problem first — and we’ll tell you that plainly.
Know What You’re Actually Being Offered
The financing market is full of products dressed up to look cheaper than they are. A quick translation:
Lines of Credit vs. Term Loans
A line of credit is revolving and flexible — good for working capital and timing gaps. A term loan is a lump sum repaid on a schedule — good for a specific investment. The trap: relying on a line of credit as if it’s permanent capital. Banks can and do reduce or pull lines exactly when the economy turns.
SBA Loans
Often the cheapest money a small company can get, with long terms and reasonable rates — but slow, paperwork-heavy, and personally guaranteed. Worth it for the right use; painful if you need cash next week.
Revenue-Based Financing & Merchant Cash Advances
Fast and easy to qualify for — and frequently the most expensive money on the menu. These quote “factor rates,” not interest rates. A 1.4 factor on a 6-month payback can translate to an effective APR north of 60%. We convert every offer to a true APR so you’re comparing apples to apples.
Venture Debt
For VC-backed companies, a way to extend runway without immediate dilution — but it sits on top of your equity story and comes with covenants. Useful when timed against a raise; dangerous when used to delay a hard decision.
Red Flags We Watch For
- Quotes in “factor rates” or “cents on the dollar” instead of APR
- Daily or weekly auto-debits from your account
- Personal guarantees on amounts that could sink you personally
- Covenants you don’t understand (and the lender is happy you don’t)
- Pressure to sign fast “before the rate changes”
Do This Monday (10 minutes)
Take any financing offer on your desk and find three numbers: (1) the total dollars you’ll pay back, (2) the total dollars you’re receiving, and (3) the payback period. If the lender made any of those hard to find, that’s the answer. Real lenders state all three plainly. If you can’t compute a true cost from the offer, don’t sign it — send it to us.
Frequently Asked Questions
How do I know if a loan’s terms are actually fair?
Convert everything to a true annual cost (APR) and compare it to what the money will earn you. We do that conversion on any offer you’ve received and tell you where it lands versus market — often the “cheap” option isn’t, and the slow option saves you tens of thousands.
Is a factor rate the same as an interest rate?
No, and the difference is where founders get hurt. A factor rate (e.g., 1.4) is a flat multiplier on the amount borrowed regardless of how fast you repay — so paying early doesn’t save you money the way it does with interest. A 1.4 factor on a short payback can mean an effective APR well over 50-60%.
Should I take on debt or raise equity?
Debt is cheaper and non-dilutive but must be serviced no matter what. Equity is expensive and permanent but flexible. The right answer depends on your cash flow stability and growth plan — we model both so you see the real trade-off in dollars and ownership.
Do you arrange the financing for me?
We’re your advisor, not a broker taking a commission off your loan — so our advice isn’t tied to closing a deal. We help you decide what to raise, prepare the financials lenders want, and evaluate the offers you get.
My bank just cut my credit line. What do I do?
First, don’t panic-borrow from an expensive source to replace it. We help you understand why it happened, what your real cash flow management needs are, and the cheapest way to bridge the gap — sometimes the answer is tightening collections, not new debt.
Convert everything to a true annual cost (APR) and compare it to what the money will earn you. We do that conversion on any offer you’ve received and tell you where it lands versus market. No. A factor rate is a flat multiplier on the amount borrowed regardless of how fast you repay — so paying early doesn’t save you money. A 1.4 factor on a short payback can mean an effective APR well over 50-60%. Debt is cheaper and non-dilutive but must be serviced no matter what. Equity is expensive and permanent but flexible. The right answer depends on your cash flow stability and growth plan. We’re your advisor, not a broker taking a commission. We help you decide what to raise, prepare the financials lenders want, and evaluate the offers you get. First, don’t panic-borrow from an expensive source. We help you understand why it happened, what your real cash needs are, and the cheapest way to bridge the gap.How do I know if a loan’s terms are actually fair?
Is a factor rate the same as an interest rate?
Should I take on debt or raise equity?
Do you arrange the financing for me?
My bank just cut my credit line. What do I do?