Deciding to raise a Debt Facility is only the first step. This article dives into execution and outlines how fintech and technology-driven companies can successfully run a Debt Facility in practice.
At this stage, your company has either committed to raising debt or is actively evaluating it as a financing option. The question is no longer whether debt makes sense, but how to approach the process efficiently and avoid unnecessary friction.
For founders navigating a Debt Facility raise for the first time, the process can feel opaque. There are many potential lenders, multiple structures, evolving market dynamics, and a significant amount of preparation required. While every transaction is different, the underlying steps tend to follow consistent patterns. Understanding those patterns early can save months of time and meaningful legal and operational cost.
This guide breaks down how to prepare for lender outreach, what timelines typically look like for corporate versus asset-backed debt, and what lenders actually care about during diligence.
Preparing For Lender Outreach
The universe of debt providers is broad and constantly shifting. Bank consolidations, fund closures, and new entrants mean that not every lender is appropriate for every stage or business model. Founders and finance leaders should invest time upfront identifying which lenders are realistically aligned with their company’s maturity, risk profile, and funding objectives.
Companies that run efficient processes usually begin by engaging around ten lenders, sometimes expanding to fifteen or more if competitive tension is useful. While broader outreach can increase optionality, it also adds operational burden. The goal is to strike a balance between leverage and focus.
Founders often start with lenders they already know through conferences, prior conversations, or inbound interest. If the company is venture-backed, investor introductions are often the most effective path. Venture firms typically have a strong sense of which lenders are active at specific stages and can help facilitate warm, credible introductions.
Once a target list is finalized, introductory conversations are usually short and exploratory, typically thirty minutes. These calls are not about closing terms, but about establishing fit and gauging appetite.
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Corporate Debt: Process And Expectations
Corporate debt is often the fastest entry point for companies new to borrowing. From first conversation to funding, the process typically spans four to six weeks.
Initial lender discussions focus on the fundamentals: the business model, revenue mechanics, market opportunity, recent equity financing, valuation context, and how the company plans to use the debt.
If interest exists, lenders move into financial diligence. This usually includes historical financial statements, forecasts, cash runway analysis, capitalization tables, the most recent valuation report, customer concentration data, and a current investor or board presentation. Most of this information should already exist following an equity round and is commonly shared through a secure data room under NDA.
After reviewing materials, lenders conduct deeper follow-up discussions and present preliminary views on structure. Formal internal approvals typically follow within one to two weeks, after which a term sheet is issued. Negotiation of key terms usually takes another one to two weeks before signing.
Once signed, legal documentation begins. This phase includes confirmatory diligence, updated financials, and investor reference calls. For early-stage companies, lenders focus heavily on investor support and future fundraising prospects. At later stages, underwriting shifts toward enterprise value, retention metrics, churn, and operating leverage.
Closings typically require approximately four additional weeks. Standard venture law firms are generally sufficient for this type of financing.
Asset-Backed Debt Facility: A More Intensive Path
Asset-backed Debt Facility is structurally more complex and requires more time, preparation, and specialized legal support. Companies pursuing this route should engage counsel experienced specifically in structured credit and fintech lending.
Introductory calls for asset-backed facilities go far deeper than Corporate Debt Facility discussions. Lenders evaluate not only the company, but the economics, performance, and risk profile of the underlying assets being financed. Founders are often directly involved in explaining the origin story, risk framework, and long-term strategy.
Lenders assess how the company generates revenue, how assets are originated and serviced, who controls underwriting decisions, what regulatory constraints exist, and how performance has evolved over time. Historical data, even if limited, is critical.
A comprehensive data room is essential. This typically includes financials, asset level performance data, underwriting policies, servicing procedures, legal documentation, flow of funds models, and investor background. Even small datasets can be useful if they demonstrate consistency and transparency.
Diligence reviews are extensive and focus heavily on asset quality, yield stability, and downside protection. Term sheets may take weeks to materialize, and legal documentation can take several months to finalize.
Strategic Considerations Across Both Structures
Preparation is the single most important determinant of success in any debt raise. Clear objectives, realistic timelines, and early organization of materials significantly reduce friction.
Funding history matters. Corporate lenders focus on equity backing and capital reserves, while asset-backed lenders assess whether sufficient capital exists to support losses, advance rates, and operational scaling.
Timing also plays a critical role. A Corporate Debt Facility is most attractive when cash runway is strong and equity has been raised recently. Asset-backed debt often benefits from additional performance history, though waiting can increase legal and operational costs.
Legal expenses can escalate quickly, particularly for structured facilities. Aligning with experienced counsel early and setting cost expectations upfront can prevent unpleasant surprises.
Finally, lender relationships matter beyond closing. Debt Facility providers become long-term partners, particularly in asset-backed structures. Alignment on reporting, flexibility, and mutual understanding of the business model can materially impact outcomes over time.
Closing Thoughts
Raising a debt facility requires discipline, patience, and preparation. It is rarely simple, and every hour spent fundraising is time not spent building the business. Founders who approach the process with clarity and structure are best positioned to secure favorable terms while minimizing distraction.
Once a Debt Facility is live, managing it becomes its own discipline. Reporting requirements, covenant tracking, and eligibility monitoring can be operationally demanding.
