Venture Debt Financing Options: Working Capital

Advances against accounts receivable, purchase orders, recurring revenue, inventory or contractual payments. May be appropriate for a more mature company with a stable revenue stream. Typically financed on an all asset lien (with a negative pledge on intellectual property), on a revolver basis for a 6-month to 2-year period.

Case Study
An angel-backed software company was seeking a line of credit based upon its Accounts Receivables. However, the company had very little collateral with which to secure debt financing. This case study illustrates the benefit of Working Capital as a form of debt financing for firms with positive revenues and A/R that also have limited tangible collateral.

Accounts Receivable Financing Provides Working Capital