Products

First West Capital offers debt financing to profitable small and mid-sized companies looking to grow via acquisition, buyout or expansion. Our subordinated debt and mezzanine financing products are suited to companies in all industries that have a history of positive cash flow or strong near-term potential.

Our aim is to help you achieve your goals and our loans are customized to fit your needs. And, in addition to providing the capital you need on terms you’ll appreciate, we can provide financial structuring advice and connect you with advisors or a senior lender to ensure you have the resources you need to grow your company wisely.

Subordinated Debt

Subordinated debt is a form of second position commercial lending that focuses on positive cash flow rather than collateral.

If your company lacks the assets to secure a loan, you may face limitations on what you can borrow from a traditional bank. Subordinated debt is available to companies that demonstrate historical cash flow but may lack sufficient tangible security to pledge to a bank.

Subordinated debt is usually structured as a term loan for a fixed period of time (three to seven years) with payments of interest and/or principal. The loan is secured with a Loan Agreement and General Security Agreement on the company, supported by guarantees by related companies.

We require a limited personal guarantee from the principal owner or partners to support the loan, and we often ask for an assignment of life insurance on the key person.

Repayment of the loan is quite flexible. We often provide interest-only periods, followed by scheduled repayments of interest and principal. The schedule can take into account company growth, seasonality and we can even provide a non-amortizing term loan with one balloon payment of principal at maturity.

Mezzanine Financing

Mezzanine financing is similar to subordinated debt but adds an equity bonus to the return requirement to compensate for the additional risk associated with borrowing more than the cash flow level can support, but where enhanced cash flow is anticipated in the near term.

Mezzanine financing is suited to early-stage companies with a need for capital but without a consistent record of profitability. If we can get comfortable that the business will become cash flow positive in the near term, mezzanine finance can be used instead of equity. 

It can also be used in a management buyout where less than 25 per cent equity is being contributed. Again this can help the management team acquire a majority stake and control of the business, avoiding the need for an equity partner.