The goal is to finance your company with a balance between safety and cost. Factors which determine the appropriate forms of capital include the level of liquid assets or fixed assets to pledge as collateral, cash flow leverage (Debt/EBITDA), coverage ratios, cash flow stability, industry, size of the company, and other factors.
Optimizing a company’s capital structure is part art, part science. Companies that are tangible-asset rich can use secured bank debt – the least expensive capital. After bank debt, other forms of capital move down the safety curve and up the cost curve as shown below. We will help you minimize the cost of capital.
– Costs vary widely by capital type. (source: Pepperdine University)