Debt Financing

Debt Financing

Apr 1, 2019

Debt Financing

Who can raise debt?

Businesses that,

1- Have profitability history, Or/And

2- Have assets that can be pledged as security.

Whether it is a bank loan or a private lending agreement, lending represents a commitment that could be a burden on the business cash flow Or a way to increase its value and profitability. In all cases, the business file has to speak up for the lenders and build confidence.

We enable businesses to   showcase and build   confidence.

Debt Financing

Debt from banks has been based on the capability of the business to pay, on time, the principal and the service. We enable SMEs with all Debt Financing:

Financial Analysis: To assess why the debt is required, ways of substituting it organically or by other means of financing.

Credit Analysis: To assess the cash flow capability to serve the proposed amount for the proposed tenure and solutions that could enhance it.

File assessment and preparation: The properly prepared file presented to any creditor will minimise the time of the creditors and allow them to quickly process it as well as it showcases the business, its seriousness and capability.

Lenders Screening: Many available lenders with a range of criteria and requirements, we help you target the lender that matches your business capabilities and supports your business in a matter that does not burden the capability of growth.

Debt Financing
Bank Loans

+ Could be the cheapest way of financing for SMEs
+ Straightforward in its cash flows

– Strict and rigid in its terms
– Collateral usually included

– Requires longer time spams for approvals and disbursement

Non-bank Loans

+ Flexible and usually includes potential synergies
+ Faster in term of approval and disbursements
+ Could not include collateral
– Requires legal and financial advice
– May be transferred to ownership in case of default

  • Average bank rejections rate in Egypt 66.6% 66.6%
  • Percentage of SMEs that require professional financial advice 83% 83%
  • Percentage increase of loan value after professional financial advice 50% 50%

Lending Solutions

 

When bank loans are off the table, companies target institutions or private placements Investors for their financing needs.

The agreement options, the limits of intervention in management decisions and the risk distribution could help business owners and decision-makers have a vividly clear picture about the risk/reward trade-off and the good-faith of the non-bank lenders.

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Bank Financing

 

” Businesses can organically fulfill their financing needs organicaly if they commit to a basic set of financial objectives and reforms, or check eligibility for bank loans before applying could save them precious time and money that could be better allocated.”

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Before borrowing 3 fundamental questions have to be considered

  1. What is the best option for business financing needs?
  2. Who are the possible providers to approach, banks, institution or private?
  3. Can lending cover all the financing needs without hurting cash flows?

Our commitment is to empower businesses.

Saving them money, time and effort in a long process.

Many businesses can cover their own working capital or investment capital needs without borrowing.

After the lending decision is made, It is very important to prove to the lenders the business creditworthiness and solvency of the business. The main source of bank loans rejections (as per EBI. SME unit publications) is lack of strong accounting. 75% have no business plans and feasibility, and many are also rejected due insufficient collateral. 

Proper financials must match the capital providers` requirements based on the business case, and/or put in place a:

  • Business plan
  • Feasibility study
  • Financial analysis 

The main requirements for a loan are the basic documents (Registration, license, tax card…), Financial Performance and 2 to 3 years of existence (Audited Accounts).

Debt Financing

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Equity Financing

Equity Financing

Mar 30, 2019

Equity Financing

When the two debt conditions are not present in the business, it is easier to obtain equity. Another advantage of equity is the risk-sharing aspect of equity.
According to the EBI SME unit publication, half of the SMEs in Egypt prefer equity financing, and it is the only option for ventures and startups. We can determine the type of financing based on the stage of the business and its performance.

Startups and Ventures

The first round of financing is usually from friends and family members. Thereafter, the challenges are the same as SMEs, Valuing the company, determine percentage shares and above all the economic benefit of the project.

What we do?

For entrepreneurs: We take a methodological approach that starts with the feasibility study and business plan study then extends to pitch decks and investment proposals.

Buyer side advisory services: Valuations, percentage of shares and capital structure, the feasibility of the project and its economical value.

For SMEs

The challenge is finding the investor, valuing the company and determining the percentage of shares required by the capital providers. The equity capital providers are interested in the economic benefit and/or upstream or downstream synergies.

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Determining the kind of financing

In every business stage, the risks and the required return varies and hence has a different type of investor to approach.

Equity Financing

Equity Financing

 

Equity Investor bares some of the business risks and offers more than financing. It enables entrepreneurs to assume more risks and benefit from the expertise and support of the investor. We enable entrepreneurs and investors by offering them accurate, reliable and punctual solutions from the seller side or the buyer side

Pre-Money & Post-Money valuations

Feasibility Studies

Executive summary and pitch decks

Sell-Side reports

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14 + 1 =

 

Kind of financing/Characteristics Seed – Startup Series A or B Series C – Mezzanine Public
Business Stage Idea – Prototype Growth stage/Sales Expansion Maturity
Investor type, Source of funding Family, Friends, Angel Investor Venture Capital & Angel funds Venture Capital, M&A, Strategic Investor IPO, M&A
Average Amount < $ 250,000 $ 250,000 up to $ 5,000,000 < $ 50,000,000 $ 50,000,000 +
Valuation None/very hard to value the idea $ 750,000 up to $ 15,000,000 Up to $ 100,000,000 $ 100,000,000 +

*As per the world major capital markets and the business stage, though the amounts vary depending on the geographic location and the strength of the currency. In Egypt, the amounts average the same but in Egyptian Pound.