Comparison of different types of borrowing

Collateral

Mandatory

Optional

Optional

Amount of financing

Limited to collateral value
Limited to the ability to service debt (usually up to Debt EBITDA 3x)

Not limited to the value of the collateral
Limited to the company’s ability to service debt (usually up to Debt / EBITDA 5x)

Not limited to the value of the collateral
Limited to the company’s ability to service debt

Financing rate

~ 2-5%

~ 5-9%
Depending on the project’s risk level

~ 14-16%
Part of the rate may be payable at maturity (PIK)
There may be additional costs depending on the company’s performance (performance kicker)

Amortisation schedule for the principal amount

Every month

At maturity

At maturity

Lender

Bank or less often a syndicate of banks

On average, 5-10 investors, including Signet Bank

Usually, an alternative investment fund

Deal structure

Inflexible

Relatively flexible

Flexible

Ability to promote public recognition

None

Yes

None