BDC Financing for tech companies – Customized Working Capital (2022)

ByMaurice
  • This program is currently closed.

Description:

BDC helps tech firms looking to raise working capital for growth initiatives, but have insufficient tangible assets to secure conventional financing and don’t want to dilute their ownership.

Comments on Funding:

Financing is between $200,000 and $35 million.

Benefits: security subordinated to secured lenders, which gives companies more borrowing power; limited to no involvement in management, which keeps the business in the current management hands; personal assets are not taken as collateral; repayment is tailored to the companies’ business model.

Eligibility:

Applicants must:

  • Run an established or high-growth tech firm
  • Have a strong management team
  • Demonstrate quality of financial reporting

Other Things to Note:

There are 3 financing solutions:

  • Mezzanine financing customized to the needs: offers repayment terms tailored to the business reality. It gives freedom to structure the loan according to cash inflows in order to protect working capital. It’s an alternative that can bridge the gap between senior debt and equity financing to get the project moving forward.
  • Cash flow financing for growth projects for tech companies that demonstrated a consistent track record of positive and strong cash flow and have planned large-scale growth projects to generate more or new sales. This solution helps raise the capital needed with stable terms and conditions that provide peace of mind.
  • Quasi-equity financing to share the risk: for entrepreneurs that run a start-up business or just launched a new technology based on recurring revenues, but did not reach positive or strong cash flow, even if the forecast shows the company will reach that objective in the near term. This solution allows to raise capital to keep cash in the business for daily operations until it generates profits.

Program no longer active at the beginning of 2021.

About the author

Maurice

Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business. Click here to learn more about Moe’s background and how he can help your business.

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