How do I fund business growth?

A term sheet records proposed deal terms before definitive agreements; commercial provisions are often non-binding, while selected clauses can be binding depending on wording and governing law.

A bridge loan is a short-term loan used to meet immediate financing needs while waiting for more permanent funding. It serves as a temporary solution to bridge the gap between the need for funds and the availability of long-term financing.

Mezzanine financing is a hybrid form of funding that combines debt and equity features, typically used by companies to finance growth or acquisitions. It often involves subordinated debt with warrants or options for the lender to convert into equity in case of default.

In the context of debt, a covenant is a clause in a loan agreement or bond indenture that imposes certain conditions or restrictions on the borrower. Covenants are designed to protect the interests of lenders by ensuring that the borrower maintains a certain level of financial health and operates within agreed parameters. These conditions can be financial (financial covenants) or operational (non-financial covenants) and are critical in debt agreements to mitigate risk.

A liquidation preference gives specified investors priority over common shareholders for available proceeds from a sale, merger or winding up, according to the governing documents.

A convertible note is debt that may convert into equity under agreed triggers, while its maturity, interest and repayment terms continue to govern if conversion does not occur.