If you are a business owner who is looking to raise capital, you may have heard of what are known as commercial mortgage loans and whether or not they are suitable for your business. If this is the case, it is important to know exactly what a unitranche loan is before you look into whether or not you should take advantage of them.
These type of loans are basically an unsecured loan. This means that you will not be able to offer collateral such as land or property. The main purpose of these types of loans is to provide you with the funding that you need to be able to make the capital that you need to continue running your business.
The first thing to understand about these loans is that they can only be used for making purchases or for the purchase of an existing business, and they are not for raising capital from private equity or other sources. When you are looking to obtain the funding that you need to start up a new business or even expand one that you already have, you will most likely want to utilize this type of loan. It will also allow you to pay off debts that you have accumulated over the years. However, this is a loan that you will have to pay back in full before you will ever be able to take advantage of the money that you save as interest on your monthly payments.
These types of loans are also known as unitranche’s because they come from private equity and are very similar to the private sector loans that are available to individuals. As opposed to being secured, they are unsecured.
As with any type of loan, there are risks associated with these types of loans and there is also the potential for a lender to default. As with any type of loan, when there is a borrower who defaults, the lender will have to bear the loss. You will then have to look for another lender and the process will start all over again.
As you can see, if you are looking to use private equity loans to help you start up a business, or expand one that you already have, there are risks involved but there is also the potential for a good return on your investment. If you are interested in whether or not they are suitable for your needs, you can talk to a lending professional that can help you decide what would be the best option for you to take.