Late stage lending products
Considering global growth options, or preparing for buyout? Our suite of specialised lending solutions for late stage innovation businesses can be tailored to help you navigate to your next milestone.
Lending solutions
Flexible revolving credit facilities, which can be provided on a secured or unsecured basis, can be used for a variety of purposes.
Cashflow revolving credit facilities
Whether enabling you to invest in working capital, capital expenditure, M&A or to use for other general corporate purposes, our teams’ expertise co-ordinating and arranging financings on larger, multi-banked facilities, ensuring a smooth process and attractive terms for companies.
May be suitable for
- Working capital financing for higher-growth companies.
- General corporate purposes financing for larger borrowers (often multi-banked mid-market listed companies).
Key features
- Ability to draw, repay and then re-draw the facility according to your requirements.
- Multi-currency options.
- Flexible financing accessible on 3 – 5 year tenors for medium-sized and larger borrowers, with the ability to extend maturities on the first and second anniversaries (subject to lender consent).
- Typical security includes first-ranking charges (e.g., a UK company debenture). For larger listed companies, facilities may be unsecured but typically are guaranteed by a material subsidiary comprising c.80%+ of revenues, EBITDA and Assets.
- Facilities are governed by financial covenants, typically restricting Leverage (Debt / EBITDA) and Interest Cover (EBITDA / Finance Charges).
- Ability to ‘carve-out’ an element of the facility for ancillary product requirements (for example FX and Trade Finance instruments).
Cashflow term loan facilities
Another flexible loan facility, this solution provides loan financing for specific financing requests, for example, but not limited to, acquisitions capital investment.
May be suitable for
- Companies investing in acquisitions or CAPEX projects.
Key features
- Financing accessible on 3 – 5 year tenors for medium sized and larger borrowers.
- Multi-currency options.
- Typical security includes first-ranking charges (e.g., a UK company debenture). For larger listed, facilities may be unsecured but typically are guaranteed by a material subsidiary comprising c.80%+ of revenues, EBITDA and Assets.
- Facilities are governed by financial covenants, typically restricting Leverage (Debt / EBITDA) and Debt Service Coverage (EBITDA less CAPEX and tax / finance charges and capital repayments) or Interest Coverage (EBITDA / Finance Charges).
- Funding generally structured on an amortising basis, with scheduled repayments agreed at the outset in line with your forecasts post-completion of your project (if used for acquisition or capital expenditure).
Innovation company asset-based lending
This flexible financing approach can be used to support various objectives for high-growth companies, because it is structured against the company’s asset base rather than operational cash generation.
May be suitable for
- Companies with modest free cash generation due to investment requirements, requiring financing to support working capital and future growth investment.
Key features
- Financing accessible for typically 12 – 36 months.
- Multi-currency options.
- Typical security includes first-ranking charges (e.g., a UK company debenture) and guaranteed by a material subsidiary comprising c.80%+ of revenues, EBITDA and Assets.
- Facilities are governed by financial covenants such as Adjusted Quick Ratio in relation to balance sheet liquidity (typically Cash and Accounts Receivable / Current Liabilities, excluding Deferred Revenues) and Minimum Revenues or EBITDA (set at a headroom % to plan) – all which tested monthly.
- There is a requirement to conduct Collateral Audits to validate the accuracy of your receivables base. The audit is carried out by an independent party (at your cost) in advance of the facility closing and annually thereafter, with the report delivered to the bank.
- All accounts receivables ‘collections’ are processed via and through dedicated HSBC Innovation Banking bank accounts (in relevant currency of choosing).
Recurring revenue facilities for software companies
Flexible financing to support high-growth software companies structured against the company’s recurring revenues, which can help meet a number of needs.
May be suitable for
- Companies with strong SaaS / subscription recurring revenue growth, but with modest free cash generation due to investment requirements.
Key features
- Financing accessible for typically 12-36 months.
- Multi-currency options.
- Typical security is first-ranking charges (e.g., a UK company debenture) including intellectual property, and guaranteed by a material subsidiary comprising c.80%+ of revenues, EBITDA and Assets.
- Facility limit is calculated as a multiplier on to the business’s 6x monthly subscription and recurring revenues, and determined by your growth rates, gross profit margins and churn rates as well as cash burn. Potential to stretch advance rates for high quality larger SaaS businesses (>$50MM annual recurring revenues).
- Facilities are governed by financial covenants such as Minimum Liquidity; Minimum Annual Recurring Revenue values or EBITDA on a monthly basis (or quarterly basis for larger borrowers).
- There is a requirement to conduct Collateral Audits and Harvest analysis to validate the accuracy of your recurring revenue customer base, carried out by an independent company (at your cost) in advance of the facility closing and annually thereafter, with the report delivered to the bank.
- All accounts receivables ‘collections’ are processed via and through dedicated HSBC Innovation Banking bank accounts.
Meet the Corporate Finance team
Our specialist teams are full of knowledgeable people dedicated to creating a bespoke path for all our clients and their investors.