The last two pieces looked at the new money: what it is for, and what shape the request takes. Both of those are decisions the borrower gets to make. This one is not. How much a borrower can raise, which lenders are able to look at it, and what it will cost are all limited by the debt already on the books, and those limits are set before the first meeting.

Two companies want a $10mm senior secured term loan. Same sector, same earnings, same collateral base. One has no debt. The other has an $18mm senior facility with a blanket lien on all assets, a debt incurrence covenant capped at 3.0x, and a maturity fourteen months out.

The first company is negotiating a term sheet. The second is not asking for a term loan at all, whether they realize it or not. They are asking someone to either refinance the whole structure, come in behind an existing lender who has already claimed the collateral, or wait for the incumbent’s permission. Three very different conversations, with three different sets of lenders, and the borrower’s own paperwork decided which one they are having.

A credit team works through the existing stack before it gets to the plan. Three things come out of it.

The stack: what position is available

Every dollar of existing debt occupies a position, and those positions are taken. A borrower can only offer what is left.

Borrowers routinely offer positions they do not have. A first lien on the receivables cannot be granted twice. A senior position is not available to a second lender while a senior facility is outstanding, unless the incumbent agrees to share it or is repaid. A blanket lien, which most bank facilities take, means there is no unencumbered asset left to pledge, including assets nobody had in mind at the time.

A new lender is not pricing the borrower’s earnings. It is pricing those earnings minus everything senior to the new claim, tested against a downside. The same business supports very different amounts of new debt depending on how much of it is already committed elsewhere.

The position that is left is not always the one the borrower believes they hold. A facility described internally as a working capital line may carry a blanket lien nobody remembers granting. An equipment financing signed three years ago may have taken the one asset a new lender wanted. Neither is unusual. Documents get signed one at a time, to solve whatever problem the company had that quarter.

Borrowers negotiate over the position they want. Lenders underwrite the position that is actually left.

The maturities: where the walls are

A new lender needs to be repaid, and repayment competes with every other obligation coming due. The question is not whether the business can service the new loan. It is whether the business can service the new loan while also repaying or refinancing whatever comes due first.

This is why a maturity sitting inside the proposed tenor of the new facility is a problem rather than a detail. If a five-year term loan is being asked for and an existing facility comes due in year two, the new lender is being asked to fund a business that has to refinance something else halfway through their loan, in a market they cannot forecast. They will either want the existing debt taken out at close, or they will want to be repaid before it.

Amortization matters for the same reason and is easier to overlook. Scheduled principal payments consume cash flow that would otherwise cover the new facility. A stack that looks manageable on total leverage can look tight when the actual cash demands are laid out year by year, and that is the view a credit committee builds.

Time remaining on the existing facility

The maturity clock is the only item in the stack that changes the borrower’s negotiating position on its own. The business can perform exactly to plan and the position still weakens.

Three years out, a borrower can run a process, decline terms, and walk. Eighteen months out, they are still credible but visibly on a clock, and every lender they speak to knows the alternative to a deal is a problem rather than nothing. Inside twelve months, the incumbent knows there is not enough runway to replace them, and the market knows it too. The business is the same at all three points. The terms available are not.

That timing drives a decision with no general answer.

Both answers are defensible, and experienced people disagree on this regularly. What decides it is how the incumbent behaved the last time a quarter came in soft, whether the trailing numbers will hold up with four lenders reading them at once, whether the owners will fund a gap if one opens, and what the market is paying for this profile now. None of that is in the credit agreement.

One part is not a judgement call. A borrower who mapped this at thirty-six months has both options. At fourteen months, only one of them is realistic.

The documents: the incumbent may have a vote

This is the part that surprises borrowers most. An existing credit agreement frequently limits, and sometimes prohibits, exactly what is being contemplated. The constraint is not the new lender’s appetite. It is a document already signed.

Three provisions do most of the work. **Debt incurrence** covenants cap how much additional debt can be taken on, often as a leverage multiple, and sometimes with a hard dollar basket. **Negative pledge** and lien covenants restrict what further security can be granted, which can make a secured facility impossible without consent. **Change of control and prepayment** terms determine what taking out the existing debt actually costs, including any make-whole or prepayment premium.

Where more than one lender is already in place, an intercreditor agreement governs how they relate to each other: who controls enforcement, who gets paid in what order, and what a junior lender is permitted to do when things go wrong. A new lender entering that structure is agreeing to those terms, and will read them before agreeing to anything else.

The practical consequence is that the incumbent lender is a participant in the raise whether the borrower involves them or not. A consent that needs to be obtained is a timeline item, a negotiating position for the incumbent, and occasionally a repricing of the facility they already hold.

Most of these constraints have a price

Some of those provisions are hard limits. Most are not. Negative pledges get waived. Incurrence baskets get amended. Prepayment premiums get negotiated, or shopped against a lender willing to absorb them. An incumbent asked at the right time, with a reason that serves them, frequently agrees.

The price varies, and it is not published. It depends on how the incumbent views the credit today, what else they want from the relationship, how much of their own capacity is committed, and whether they believe the borrower has alternatives. Two borrowers can ask the same lender for the same waiver in the same month and get materially different answers.

So the question is rarely whether the document allows something. It is what it will cost to change the document, and whether that is cheaper than working around it. That depends on the lender, not on the document.

The claims that are not on the debt schedule

Not everything ahead of a new lender appears on the debt schedule. Capital leases and equipment financings are debt in substance and usually secured on the specific asset. Convertible notes carry maturities and conversion mechanics that change the picture depending on how they resolve. Preferred equity with a liquidation preference behaves like a claim in a downside whatever it is called on the cap table. Seller notes from a prior acquisition, earnouts still owed, deferred purchase price, unfunded pension obligations, and drawn letters of credit all sit somewhere in the order of payment.

A credit team builds this list whether or not the borrower hands it over, and an item found rather than disclosed costs more credibility than the item is worth.

Which conversation the borrower is in

The practical output of all this is knowing which of three conversations the existing structure has already put the borrower in. Each one goes to a different set of lenders, on a different timeline, at a different cost. Most borrowers assume they are in the first.

Use of proceeds and the shape of the ask are arguments a borrower makes. Existing capital is a constraint a borrower inherits. Reading that constraint is work a borrower can do with their own documents. Deciding what to do about it, which lender will take the seat that is left, what the incumbent will accept and when to ask, takes a view on what the market is paying for that position today. That is a view on the market, not on the documents.

Next in the series

Timeline and trigger: setting expectations for the process

What is prompting the raise, and the date the borrower has in mind. The trigger points to events that could shape the deal. The timeline determines how much diligence is possible before a lender has to decide.

Reading your own stack is work you can do. Knowing which seat the market will actually offer, and what the incumbent will accept, is the part I do at Synthase Capital Partners.

In the last piece, two companies asked for $10mm and turned out to be entirely different credits because the money was doing different work. This time, hold the use constant and change only the shape of the request.

A borrower needs $10mm of working capital. They can ask for a $10mm five-year term loan, or a $10mm revolving line they draw and repay as receivables turn. Same amount, same purpose. But the term loan sits on the balance sheet whether it is needed or not, accrues interest on the full balance for five years, and creates a maturity in year five. The revolver costs a fraction of that in a normal year, flexes with the business, and renews.

One of those requests reads as though the borrower understands their own cash cycle. The other does not.

The ask has three parts, and each one is doing work well beyond the number attached to it.

How much: sizing the amount

Borrowers tend to worry that asking for too much will scare a lender off. In practice, asking for too little is the more common error and the more damaging one.

An undersized facility means the borrower is back at the table in eighteen months, and that second conversation happens from a weaker position. Something did not go to plan, the original thesis needs revisiting, and the lender now has evidence that the borrower’s forecasting runs optimistic. Meanwhile the first loan is already outstanding, so the negotiation is no longer a clean sheet.

Asking for too much has real costs too. It raises leverage, which raises pricing and tightens covenants. It can push the request past what the cash flow visibly supports, which forces the lender to lean on collateral or a sponsor. And an amount that does not tie back to a specific plan invites the question of whether the plan exists.

The defensible position is an amount built from the bottom up, with a stated cushion. Not “we would like $15mm” but “the plan requires $11mm, and we are asking for $13mm because collections could run thirty days slower than modeled.” The second version tells a lender the borrower has already worked through the downside.

An amount built from the bottom up can be tested. A round number chosen for comfort cannot.

Sizing the cushion is a judgement call

Naming the plan requirement is arithmetic. Deciding how much to add on top of it is not, and this is where two experienced people will give a borrower different advice.

What decides it is how this borrower’s last three forecasts actually performed, whether the lender will treat the cushion as prudence or as doubt, whether pricing is likely to be tighter or looser in eighteen months, and how much covenant headroom the larger amount consumes. None of that is in the model.

For how long: tenor and the shape of repayment

Tenor is where mismatches show up most often, and they are read as a sign of inexperience rather than as a negotiating position.

The money should be outstanding for roughly as long as the thing it funded takes to pay for itself. Equipment with a ten-year life supports a five-year term loan comfortably. A receivables cycle that turns every sixty days does not need five-year money; it needs a revolver. Funding a short cycle with long money means paying for capital the borrower is not using, and funding a long asset with short money means a refinancing risk that has nothing to do with performance.

Alongside tenor sits the repayment shape. An amortizing loan pays down steadily, which reduces the lender’s exposure over time and forces discipline on the borrower. A bullet or balloon defers everything to maturity, which preserves cash in the near term but concentrates all the risk on a single date, and pushes the whole credit onto the refinancing market being open when that date arrives. Neither is right or wrong. But a bullet structure moves the conversation squarely onto whether a future lender will want this business, which is a much harder question to answer today.

On what terms: security, seniority, recourse

This is the part borrowers give the least thought to and lenders give the most. Three words determine what a claim is actually worth if the business stops performing.

Security is whether specific assets stand behind the loan. A secured lender has a claim on identified collateral. An unsecured lender has a claim on the business generally, which in a downside is worth whatever is left after the secured lenders are satisfied.

Seniority is where the claim sits in line. Senior debt is paid first. Subordinated debt waits, and is compensated for waiting with a higher rate. A borrower who already has senior debt outstanding is not offering a senior position to the next lender, whatever the term sheet says, and that changes the pool of interested parties immediately.

Recourse is who else stands behind the obligation. A parent guarantee, a sponsor support letter, or a personal guarantee extends the claim beyond the borrowing entity. Its value depends entirely on the credit of whoever is giving it, and on whether it is documented and callable rather than merely intended.

Each of these moves along the same axis: the more protection the structure gives the lender, the cheaper the capital and the tighter the constraints on the borrower. The trade is real in both directions.

The fourth part: covenants

Borrowers describe the ask in three parts and stop. Lenders hear a fourth, whether it is stated or not: what rules will govern the borrower’s behavior once the money is drawn?

Covenants exist because a lender’s protection cannot rest on good intentions. Financial covenants set tests the business must keep passing, typically a minimum coverage ratio or a maximum leverage multiple, checked quarterly. Restricted payment provisions limit distributions to shareholders, so cash cannot leave the business while the debt is outstanding. Debt incurrence provisions limit what else can be borrowed, and whether any of it can rank ahead of this claim.

The reason to think about this at the ask stage rather than at documentation is that covenants and pricing trade against each other. A borrower who wants maximum operating freedom will pay for it. A borrower who can live with tighter tests and tighter reporting gets cheaper capital. Neither position is wrong, but the choice should be deliberate rather than discovered in a term sheet.

One related question is worth working out early: how much headroom does the plan leave against the covenants the borrower is likely to be offered? Projected coverage sitting barely above a customary minimum puts the business one soft quarter from a technical default, and a lender will see that in the model whether or not the borrower has looked.

The shape decides which lenders can look at it

Lenders are not a single market. Each type operates under a mandate that dictates what it can hold, and a request falling outside a mandate is a decline rather than a negotiation.

An ask defined carelessly puts the borrower in front of the wrong lenders, collecting declines that say nothing about the business. Defined well, it puts them in front of the few parties whose mandate actually fits.

The ask is the first thing a lender sees, and it is read as a proxy for how well the borrower understands their own business. Getting the three parts internally consistent is work a borrower can do alone. Choosing where to sit on each one, and which lender type to take it to, depends on what the market is paying now and how a specific lender has behaved recently.

Next in the series

Existing capital: who is already in line

Most borrowers already have debt. What sits ahead of the new dollar, what is already pledged, and when it all comes due sets the limits on what any new lender can offer.

Defining the ask is work you can do. Knowing what the market will actually pay for it, and which lenders will look at it, is the part I do at Synthase Capital Partners.

The first question in any credit conversation is some version of “how much do you need?” It feels like the important one. It is not. The amount tells a lender the size of the exposure. What the money is for tells them whether there is a credible way to get it back.

Consider two companies, both asking for ten million dollars over five years.

The first is buying manufacturing equipment. The equipment has a useful life of ten years, it will produce measurable output, and if the business fails, the equipment can be sold. The loan is shorter than the asset’s life, the asset generates the cash that services the debt, and there is something tangible standing behind the claim.

The second is covering an operating shortfall. Revenue has not kept pace with the cost base, and the ten million funds the gap for the next several quarters. Nothing is acquired. No new cash-generating capacity is created. The money buys time, and the repayment thesis rests entirely on something changing before the time runs out.

Same amount, same tenor, same industry. Entirely different credits.

This is not a judgment about which company is better run. Plenty of good businesses need bridge capital, and plenty of weak ones buy equipment. The point is narrower: the use of proceeds determines whether a lender can build a repayment story at all, and how much of that story depends on things nobody controls.

Why a lender starts here

Every loan has a hierarchy of repayment sources. Most often the primary source is operating cash flow, but not always: an asset-based facility looks first to the collateral, a bridge looks to the event that repays it, and a real-estate loan looks to the operating income the property produces. Behind the primary source sits a secondary one, usually a refinancing, and sometimes a tertiary source such as an asset sale or a sponsor’s support. Use of proceeds is what tells a lender which of those sources the deal actually depends on.

Money that funds a revenue-producing asset can strengthen the primary source, whether that source is the cash flow or the asset itself. Money that funds a shortfall consumes it. Money that refinances existing debt does not change the business at all; it changes who holds the claim and when it comes due, which pushes the entire question onto the secondary source. Which source the deal leans on is a question in its own right, and one we come back to later in the series.

The amount tells a lender what is at risk. The use of proceeds tells them how it gets repaid.

There is a second reason this question comes first. Use of proceeds routes everything downstream. If you are buying equipment, a credit team will spend its time on the asset, the vendor, the installation timeline, and whether the projected output is realistic. If you are funding a shortfall, they will spend it on burn, runway, and what specifically changes before the money is gone. Two completely different diligence exercises, decided by one answer.

It also routes the rest of the read. A growth story sends a credit team into the durability layer, where the question becomes whether the repayment source holds long enough to matter. A distress story sends them to the repayment layer, where the question becomes what can be recovered if the repayment source erodes.

The six uses, and what each one signals

Most requests fall into one of six categories. None of them is disqualifying, but each one moves the conversation somewhere different.

Two things are worth noticing about that list. First, the further down you go, the more the repayment story depends on the future rather than the present. Second, a request often belongs in more than one category, and how you describe it matters. “Growth capital” that is really covering a shortfall does not survive diligence, and the discovery is expensive: it costs credibility at exactly the moment you need it.

Does the structure match the use?

The last part of this question is one borrowers rarely ask themselves: does the money you are requesting have the right shape for what you are doing with it?

Long-lived assets should be funded with long-dated money. Seasonal working capital should be funded with a revolver that draws and repays, not a term loan that sits on the balance sheet for five years. A mismatch is not merely inefficient. It creates a refinancing event that has nothing to do with how the business is performing, and lenders read it as a sign that the borrower has not thought the request through.

Getting this right is one of the cheapest credibility wins available. It costs nothing but clarity.

What to have ready

A sources and uses table. Where every dollar goes, adding to the amount you are asking for. If you cannot produce this in one page, the request is not defined yet.

The honest category. Name the use plainly, including the uncomfortable part. A lender will find it anyway, and finding it themselves costs you more than telling them.

The link to repayment. One or two sentences connecting what the money does to the cash that services it. If that link runs through a hoped-for event, say so.

A structure that fits. Tenor matched to asset life, revolver for working capital, amortization that tracks the cash the use actually generates.

None of this requires a better business. It requires being precise about the one you have.

Next in the series

Amount and structure: defining the ask

How much, for how long, and on what terms. The shape of the ask decides who might be interested in providing the capital, how much it will cost, and what the consequences are if things do not go according to plan.

If you are preparing to raise debt and want a read on where you stand, that is what I do at Synthase Capital Partners.

Somewhere in the middle of a financing process, a founder gets a question they did not expect. Not a hard question, exactly. Just one from an angle nobody at the company had thought to look from. Something like: what happens to your margin if revenue falls twenty percent? Or: which of your customers could leave next quarter without penalty?

The answer usually exists. It just isn’t written down, isn’t agreed internally, and isn’t supported by anything a credit committee can lean on. So the process slows, the lender gets cautious, and the terms drift.

This series is about seeing those questions before they arrive.

Debt is not equity with a different price

Most operators learn to raise money from equity investors first, and the instincts carry over badly. An equity investor is buying a share of everything that could go right. Their return is uncapped, and one exceptional outcome pays for a portfolio of failures. So they lean into ambition, market size, and the shape of the upside.

A lender has no such asymmetry working in their favor. The best possible outcome is that you pay back exactly what you agreed, on schedule, and nothing surprising happens along the way. There is no version of the deal where the lender does better than that. But there are many versions where they do worse, and a single loss can erase the margin earned on a dozen sound loans.

That is the whole reason lenders sound pessimistic. They are not judging your ambition. They are pressure-testing the floor underneath it. If you have never had to describe that floor out loud, the questions feel adversarial when they are merely structural.

Every credit decision comes down to one question: will the lender be repaid? Everything else is a way of testing it.

The brief, then four layers of diligence

A credit team does not attack that question head-on. Before any of it, they need the brief: what the money is for, how much you want, and exactly what you are asking for. That is the situation. Not diligence, just context, but context that changes what matters in every layer below it. Then four layers of diligence follow, each narrowing the one above.

The layers are not a checklist to be marched through. They interlock. A weakness in the model shows up as a durability question; a durability question becomes a number; a number that will not hold becomes a question about what happens in a downside. Findings move between layers, which is why the same business can look sound on one pass and fragile on another.

What the series covers

Twenty-nine components across those five layers: customers, pricing and costs in the model; competition, customer power and execution in durability; coverage, leverage and liquidity in the numbers; sources of repayment, claim priority and recovery at the end. Each gets its own piece: what the concept is, why a lender cares, what makes a business more or less exposed on that dimension, and the evidence that actually answers the question.

Each piece stands on its own. You can read straight through for the full logic, or go directly to whichever question is live in your raise this week.

Why I am writing this

I spent sixteen years in credit, twelve at Silicon Valley Bank and four and a half at J.P. Morgan, deciding which loans to approve, on what terms, and living with those decisions through the life of the loan. I have been the person asking the unexpected question, and the person explaining to a committee why a good business was not yet a good credit.

The gap between those two things is almost never the business. It is preparation. Borrowers who understand how they will be read get better terms, move faster, and lose fewer processes, not because their numbers are better, but because nothing about them is a surprise.

That is what this series is for. The questions do the work; you draw the conclusions about your own business.

Next in the series

Use of proceeds: why the need matters as much as the amount

Two companies borrow ten million dollars. One is buying equipment that will generate cash for a decade, the other is covering a shortfall. Same amount, entirely different credit profile.

If you are preparing to raise debt and want a read on where you stand, that is what I do at Synthase Capital Partners.

You’re an analyst at a debt advisory firm. Build me a prospecting list of the public SaaS companies most vulnerable to AI that are carrying bank debt, and flag the ones whose loan structures suggest trouble is coming. Make no mistakes.

I spoke that prompt into my LLM last week, which queried a proprietary research base developed by Terrain, and had auditable results back in minutes: a ranked list of 342 US-listed SaaS companies and a detailed assessment of their AI vulnerability and credit profile. A year ago, that would have been a fantasy. Five years ago, pure science fiction.

The results were the product of a collaboration: someone else’s technical mind and creativity in shaping complex datasets, paired with my own domain expertise in credit. Producing them meant working through over 5,000 SEC filings, creating a SaaS company filter and a novel AI vulnerability framework, and reviewing roughly 100 credit agreements and amendments. Keep reading to find out how we did it.

From raw filings to a proprietary and interactive research base. Source: Terrain research base.

Vanished Into Thin Air(table)

Vulnerability is the birthplace of love, belonging, joy, courage, empathy, and creativity.

— Brené Brown

It is also, in this context, the birthplace of enterprise value destruction.

The recent news regarding Airtable has been broadly covered, so I won’t rehash the deal terms. But the transaction, and the repricing of software multiples it reflects, caught my attention. Not as a trend line, but as a real economic event: an actual buyer at an actual price, not a squiggle on a chart. Airtable carried no debt, so the markdown stopped at its equity holders. But the transaction got me thinking. Who else might be exposed? And for the companies that do carry credit, what would a repricing like this do to their ability to borrow more, to refinance what they already owe, or even to raise fresh equity at these multiples against what could be viewed as a large debt overhang?

The credit side I knew I could handle; it was the kind of work I’d been doing week after week for my Loan of the Week posts, sourcing deals out of EDGAR and reading the credit agreements behind them. I could find which public companies carried exposure, and I could read the loan documents themselves. The hard part was the vulnerability question: how do you determine, at the ground level, whether a company is genuinely exposed to AI? And harder still, how do you do it at scale? One name at a time, the way I’d always worked, it would take forever.

Picks and Shovels

Erin Riglin, the founder of Terrain, and I found each other on Substack. I’d been following his publication, The Credit Terrain, admiring what he was building, and reached out. It turned out we were mirror images: I had the credit background he lacked, and he had the technical chops I didn’t, honed over a decade teaching machines to do journalism at the Wall Street Journal and later at Applied XL, the “editorial algorithms” startup he co-founded. It was, to borrow from Casablanca, the beginning of a beautiful collaboration.

Long before the news of Airtable’s acquisition, we were already discussing a specific application focused on identifying and ranking public SaaS companies deemed vulnerable to AI threats. Erin was interested in furthering his vision of Terrain enabling the “automation of expertise,” and we were both eager to use the platform as a veritable “scoop machine” for mining EDGAR, a database that was built to store filings, not to give up trends and insights easily.

What he could do with EDGAR data went beyond anything I thought possible, and honestly, it was mind-blowing.

Get SaaS-y

His first order of business was to develop the SaaS universe, and that alone took real work. Anyone who’s spent much time in EDGAR can relate: the SIC codes aren’t much help when you’re trying to understand what a company actually does. You have to go into the filings themselves and take it from management’s own description of the business. From there, the application runs every candidate through a single scope question: is the customer paying for access to a software or data product, or for labor, hardware, or a financial outcome that software merely helps produce? Consulting shops, hardware makers, and lenders that happen to run on software get screened out, leaving a universe of genuine software and data-product businesses, each assembled from its own SEC filings.

Source: Terrain research base.

Get Vulnerable

Next up, Erin had to decide how to actually parse out this concept of vulnerability. The easy way would have been to ask whether a company uses AI, but that tells you nothing: a payroll processor and a stock-photo library both “use AI” now, and only one of them is in trouble. The question he built the framework around is narrower and more uncomfortable: can an AI agent do this company’s work without ever opening its product?

Underneath every verdict sits a single test: what is left when you remove the interface? A proprietary system of record, a regulated process, settlement rails, or a data asset that took years to build means the company is defended, because an agent still has to read from and write to it. “A workflow anyone could rebuild” means the interface was the only moat, and those are the names that screen high. Erin kept high a deliberate minority verdict; simply selling software doesn’t make you vulnerable.

Source: Terrain research base.

Get Leveraged

The credit layer was the last layer, and as Erin writes about in his post, it was anything but simple. A lot of filings will actually give you a debt maturity schedule broken out by year, so that summary view isn’t where the difficulty is. What takes work is getting insights from the filings themselves, down to the discrete instrument level, and understanding who owes whom and what’s coming due, loan by loan, note by note, bond by bond. Covenants are even more work, and to understand those, he had to read each of the credit agreements to parse out the covenants and their intricate and variable definitions. They’re diverse, and often change from deal to deal and company to company. That’s where the covenant and its definition live: how leverage or EBITDA actually gets calculated at each measurement period.

65 high AI-vulnerability companies, approximately $4.86 billion, maturities from 10-K debt footnotes. Source: Terrain research base.

You Want Answers? I’ll Give You Answers.

Remember that prompt I opened with, the one asking for a prospecting list of vulnerable SaaS companies carrying bank debt? Well, I have that answer in hand now. See below for an anonymized example.

One record, identity withheld. Figures are rounded. Source: Terrain research base.

What Comes Next

I’ll share more in the next installment of this three-part series.

Part 2 will go into more detail on the research base itself, and include additional examples of how I’m using it every day to find new information.

Part 3 is still in development, but conceptually I plan to show the fruits of my labor: results from the stories I’ve published, the engagement they’ve drawn, and the feedback from my debt advisory prospecting.

In the meantime, here are a few other questions I’ve been thinking about:

• Across the whole universe, how are these companies describing the AI threat in their own risk disclosures, and whose language has quietly shifted from boilerplate to something that reads like genuine worry?

• What legal and documentation structures recur across their credit agreements, and which borrowers agreed to the most unusual or aggressive terms?

• How are software companies recognizing revenue, and do the ways they describe and categorize it differ from one sub-sector to the next?

• Which companies introduced new AI-risk language into their filings this year that wasn’t there a year ago, and what do the specific words give away?

• Where does the optimism in management’s own discussion diverge most sharply from the caution buried in the risk factors?

What are some questions you have? Reply below and let’s explore this data together.

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Decathlon’s product isn’t leverage for leverage’s sake. It’s an equity replacement: a four-to-five-year term loan meant to bridge a company to a value inflection point it can already see - more ARR, a cash-flow-positive quarter, a wave of new orders — without raising equity a round too early. Kevin explains why that thesis translates across sectors, including the parallel between life sciences startups as “farm teams” for big pharma and emerging food brands as farm teams for the Cokes and General Mills of the world.

We also trace Kevin’s career - asset-based lending, Silicon Valley Bank in 1999, the go-go days at Hercules, and a leveraged-lending stretch at White Oak - and pull out what it taught him about differences between non-bank and bank lenders. And we spend real time on the borrower’s side of the table: why credit investors underwrite the downside, why pitching a lender the equity upside misses the point, why leverage works both ways, and how a fractional CFO can change a company’s odds. We close on where he sees AI actually helping the credit underwriting process, and where it doesn’t.

We discuss Daylit’s move into AI-driven collections: why 45% of B2B invoices are paid late, why traditional dunning tools fall short, and how the company’s agents work to resolve the issue behind an unpaid invoice rather than just chase payment. We also get into how the financing and collections products fit together, and why real-time supply-chain data helped keep default rates under half a percent.

Jared also shares his view on where AI agents are heading across the supply chain, including his analogy of bringing a Jane Street–style approach to the finance function of a mid-market distributor.

We talk about why he reframes exit as a strategy rather than a transaction, the 90-day cycles he uses to close the gap between a company’s floor and its premium valuation, and the 75% of founders who regret selling within a year — usually because they planned for the business but not for what comes next. We also get into how valuation really works when the market, not a third-party report, sets the price, the wave of boomer owners with up to 80% of their net worth locked inside their companies, and his concept of the integrated CEO: aligning business, financial, and personal life so that judgment and energy don’t quietly erode the value of everything else.

In June 2026, CarParts.com (Nasdaq: PRTS) entered into a $25 million asset-based revolving credit facility with First Business Specialty Finance, LLC, secured by substantially all of the company's assets and backstopped by subsidiary guarantors. The facility replaces the company's JPMorgan Chase revolver, which was terminated with no balance outstanding, and provides working capital availability. Most notable is the covenant-light posture: the 1.10x fixed charge coverage test only springs into effect if liquidity falls below defined thresholds, while a pricing grid rewards stronger coverage with step-downs of up to 0.50%.

👓At a Glance

Origination Date: June 15, 2026

Borrower: CarParts.com, Inc.

Lender: First Business Specialty Finance, LLC

Deal Size: Up to $25.0 million (governed by borrowing formula)

Structure: Asset-based revolving credit facility

Rate: 1 Month Term SOFR + 3.25% (with step-downs)

Term: Matures March 31, 2028; auto-renews annually

Use of Proceeds: Replace terminated JPMorgan Chase revolver (no balance outstanding); working capital

Source: SEC 8-K

📷Borrower Snapshot

Sector: Consumer Discretionary

Subsector: Specialty Retail

Commercial Stage: Revenue Generating; LTM EBITDA -

Business Overview: CarParts.com is a leading online provider of aftermarket auto parts and accessories, selling replacement, hard, and performance parts to individual consumers through its flagship carparts.com website, mobile app, and online marketplaces, and to professional installers and wholesale customers through its wholesale platform. The company operates four U.S. distribution centers totaling over one million square feet and markets a portfolio of owned brands including JC Whitney, Evan Fischer, and Garage-Pro.

⚙️Structure & Terms

Source: SEC 8-K

Structure: $25.0 million asset based revolving line of credit

Maturity: March 31, 2028

Collateral: Substantially all assets of company; subsidiary guarantors under a security agreement

Rate: 1-Month Term SOFR + 3.25%, reduced by 0.25% if prior-year Fixed Charge Coverage Ratio is 1.10x–1.25x, or by 0.50% if it exceeds 1.25x

Repayment: Revolving; availability is the lesser of $25 million or a borrowing base on cash and cash equivalents, accounts receivable, and inventory. Mandatory prepayments from net proceeds of certain asset dispositions and sales of subsidiary equity interests

Borrowing Base & Advance Rates:

• 85% of Qualified Accounts (excluding qualified credit card accounts), net of payments in the process of collection

• 90% of Qualified Credit Card Accounts, net of in-process collections, capped at $5 million

• Inventory, taken as the lesser of (i) 85% of Qualified Inventory at appraised net orderly liquidation value (NOLV) or (ii) 50% of Qualified Inventory at cost or wholesale market value, whichever is lower — capped at $25 million under this line

• Less letter of credit reserves, sales tax reserves, and any other reserves the lender deems necessary in its sole discretion

Fees:

• Closing facility fee: $125,000

• Annual facility fee: $62,500 on each anniversary of closing

• Unused line fee: 0.25% per annum on the average daily unused amount

• Letter of credit fee: 0.25% per month on outstanding letters of credit

• Overadvance fee: $1,000 per day (at lender’s discretion)

• Minimum interest: $40,000 per calendar quarter

• Prepayment premium on early termination: $750,000 before June 15, 2027; $500,000 on or after June 15, 2027

Financial Covenants:

• Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a trailing four-quarter basis — but only required when a “Liquidity Triggering Event” occurs, defined as (i) the sum of cash on deposit plus availability falling below $15 million, or (ii) availability alone falling below $7.5 million.

• Customary negative covenants restricting additional indebtedness, investments, asset dispositions, dividends and stock repurchases, and liens.

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

We dig into Krista’s argument that venture, at its core, has a contract problem more than a funding problem - that the asset class works as a power-law game, but the absence of any clean “we tried, here’s how we part ways” infrastructure is what leaves so many otherwise-good businesses stranded. We get into why she thinks today’s setup - post-COVID overfunding, AI disruption, and an unusually concentrated venture market — adds up to a generational buying opportunity for sponsors willing to clean up cap tables.

We also cover where senior lenders fit in (roughly half of Edited’s deal flow comes through private credit funds, often as a forcing function in workouts), why M&A is the most underused growth lever in early-stage tech, how Krista thinks about hosting costs, headcount, and the question of what the business actually needs to do today, and how AI-native companies that didn’t make their Series A are already starting to show up in her pipeline.

In April 2026, three Palmetto Gourmet Foods operating and real estate subsidiaries of Borealis Foods Inc. (Nasdaq: BRLS) closed a $17.0 million senior secured term loan from Oxus Capital PTE Ltd. - the company’s former SPAC sponsor and a significant shareholder. Proceeds were used to repay in full (approximately $16.2 million) the company’s existing Frontwell Capital Partners facility, which had been operating under a forbearance agreement amid substantial doubt about Borealis’s ability to continue as a going concern. The facility carries a 12% fixed rate, defers all principal and cash interest for roughly twelve months, and comes packaged with board-reconstitution rights, a lender option to convert Year 1 interest into stock, and a separate agreement under which ~$33.3 million of shareholder debt converts to equity if the company fails to raise $70 million by July 1, 2026.

👓At a Glance

Origination Date: April 27, 2026

Borrowers: Palmetto Gourmet Foods, Inc.; PGF Real Estate I, Inc.; PGF Real Estate II, Inc. (wholly owned subsidiaries of Borealis Foods Inc.)

Lender: Oxus Capital PTE Ltd. (former SPAC sponsor and significant shareholder; related party)

Deal Size: Up to $17.0 million

Structure: Senior secured term loan, single tranche

Rate: 12% per annum fixed rate

Term: ~ 5 years

Use of Proceeds: Refinance Frontwell Capital Partners facility in full (~$16.2 million); transaction expenses (~$375,000); ~$425,000 to the company

Source: Press Release

📷Borrower Snapshot

Sector: Consumer Staples

Subsector: Food Products

Commercial Stage: Revenue Generating; LTM EBITDA -

Business Overview: Borealis Foods is an integrated food-science and manufacturing company built around high-protein instant ramen, sold under the Chef Woo, Chef Ramsay, Ramen Express, and Woodles brands. Its products - marketed on a “complete protein” formulation delivering 20 grams of plant-based protein per serving - are manufactured by wholly owned subsidiary Palmetto Gourmet Foods at a plant in Saluda, South Carolina, and reach roughly 30,000 points of distribution across Walmart, Costco, Sam’s Club, Aldi, Publix, and Amazon. Founded in 2019 and taken public via SPAC.

⚙️Structure & Terms

Source: SEC 8-K

Structure: $17.0 million single tranche, funded at close

Maturity: April 27, 2031

Collateral: Substantially all assets of the borrowers and guarantors, plus first-lien mortgages on the Saluda, SC distribution center (313 Greenwood Highway) and manufacturing plant (4160 Columbia Highway)

Rate: 12% per annum fixed; default rate of an additional 2%

I/O Period: Effectively ~12 months - no principal or cash interest due until the first payment date of May 1, 2027

Repayment: 48 consecutive monthly principal installments on a straight-line basis beginning May 1, 2027; cash interest payable monthly in arrears from the same date

Fees: Included in schedule 2.5 which was not filed

Equity Features: At the lender’s sole discretion, accrued “Year 1 Interest” (the interest accruing from closing through April 30, 2027 - approximately $2.0 million at 12%) may be converted into Borealis common shares, priced at the lender’s election off the 60-trading-day average closing price preceding May 1, 2027.

Financial Covenants:

• Capital Expenditures - Borrowers may not make capex in any calendar month exceeding 120% of the amount budgeted in the most recent rolling cash flow forecast, tested monthly beginning May 31, 2026

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

In May 2026, Aquestive Therapeutics (NASDAQ: AQST) closed a $150 million senior secured, multi-tranche structured term loan facility with funds managed by Oaktree Capital Management, taking out $45 million of legacy 13.5% Senior Secured Notes due 2028 and replacing them with a five-year, interest-only facility priced at 3-month SOFR + 6.25% (with a 2.75% SOFR floor). The capital is staged against catalysts: $55 million funded at close, with $20 million unlocked on FDA approval of Anaphylm™ (sublingual epinephrine), $25 million on a subsequent net sales milestone, and a final $50 million tranche available at mutual consent. The structure is a textbook example of how specialist life sciences credit providers build runway around a known regulatory inflection point and how the existing royalty purchaser, RTW Investments, has been accommodated alongside the new senior lender via an intercreditor agreement.

👓At a Glance

Origination Date: May 12, 2026

Borrower: Aquestive Therapeutics, Inc.

Lender: Funds managed by Oaktree Capital Management, L.P. (Oaktree Fund Administration, LLC, as Administrative Agent)

Deal Size: Up to $150 million (multi-tranche)

Structure: Senior secured, multi-tranche structured term loan

Rate: Variable, 3-month SOFR (2.75% floor) + 6.25%; reduced 0.25% upon Tranche B funding; up to 200 bps PIK option in first two years

Term: ~60 months; matures May 2031

Use of Proceeds: Refinance $45 million 13.5% Senior Secured Notes; general corporate and working capital purposes

Source: Press Release

📷Borrower Snapshot

Sector: Healthcare

Subsector: Pharmaceuticals

Commercial Stage: Revenue Generating; LTM EBITDA -

Business Overview: Aquestive Therapeutics is a New Jersey-based pharmaceutical company combining a proprietary oral film delivery technology (PharmFilm®) with an internal pipeline of epinephrine prodrug product candidates developed on its AdrenaVerse™ platform. The company operates as both a developer of its own proprietary products and as a contract development and manufacturing organization (CDMO) for licensees including Indivior (Suboxone® sublingual film), Cosette Pharmaceuticals (Sympazan®), Hypera (Ondif®), and Zambon (Emylif®). Its lead clinical asset, Anaphylm™ (dibutepinephrine) sublingual film, is a needle-free, device-free epinephrine product candidate for Type I allergic reactions.

⚙️Structure & Terms

Source: SEC 8-K

Structure: Up to $150 million (multi-tranche)

• Tranche A - $55 million - Funded at close (May 12, 2026)

• Tranche B - $20 million - Subject to FDA approval of Anaphylm by June 30, 2027

• Tranche C - $25 million - Subject to achievement of specified net sales milestone certified by Agent by December 31, 2027 (requires prior Tranche B funding)

• Tranche D - Up to $50 million - Available upon mutual consent of Lenders and Company

Maturity: May 2031 (~5 years from closing)

Collateral: Senior secured, substantially all-asset lien (including intellectual property), subject to the rights of RTW Investments, LP under the August 13, 2025 Purchase Agreement; an intercreditor agreement governs the relative priorities of the Oaktree Lenders and the RTW Purchaser

Rate: Variable; 3-month SOFR + 6.25% (SOFR floor: 2.75%); spread reduced by 0.25% permanently upon Tranche B funding; default rate +2.00%

I/O Period: Full term — quarterly interest-only payments until maturity; bullet repayment

PIK Option: Borrower may elect to pay up to 200 bps of interest in kind during the first two years

Repayment: Bullet at maturity; voluntary prepayment permitted subject to make-whole / Prepayment Premium and Exit Fee (see below)

Disclosed Fees:

• Exit Fee: 1.00%–2.00% of the principal repaid, depending on date of repayment; subject to reduction if (i) the Company achieves a specified net sales milestone by June 30, 2029, (ii) a mandatory paydown is triggered by failure to obtain FDA Approval by December 31, 2027, or (iii) the repayment occurs in connection with a change of control within the first two years

• Prepayment Premium: Make-whole (interest that would have accrued to the first anniversary) for prepayments on or before the first anniversary; thereafter a declining premium of 5.00% → 1.00% based on date; 0% after the fourth anniversary; subject to the same reductions as the Exit Fee

• Additional fees per fee letter (not disclosed)-

Warrants: The Company agreed to issue warrants to the Lenders equal to 1.75% of the principal amount of each funded tranche, divided by the applicable VWAP. Tranche A Warrants priced off the 30-day VWAP preceding closing; subsequent tranches priced off the lower of the Tranche A VWAP and the 30-day VWAP preceding such tranche’s funding. Warrants carry a five-year term and are subject to a registration rights agreement.

Financial Covenants:

• Minimum Liquidity (Unrestricted Cash and Permitted Cash Equivalents in Controlled Accounts):

  • - $27,500,000 prior to Tranche B funding

  • - $15,000,000 after Tranche B funding

  • - Further reducible on a dollar-for-dollar basis equal to any prepayments mandatorily required if FDA Approval of Anaphylm is not received by December 31, 2027

• Minimum Net Sales Covenant: Trailing twelve-month net sales of Anaphylm and other products developed for the treatment of Type I allergic reactions in the U.S., tested quarterly, with thresholds set on the schedules to the Credit Agreement (not publicly disclosed). Testing commences on the later of (i) the first full fiscal quarter ending after Tranche B funding and (ii) the fiscal quarter ending December 31, 2027.

• Waiver Conditions (Equity / Market-Cap Off-Ramps): Covenant is not tested in any quarter in which (x) unrestricted cash and permitted cash equivalents on the last business day of the fiscal quarter are ≥ 150% of the outstanding principal of the Term Loan, or (y) the 30-day average of the Company’s market capitalization as of the last trading day is ≥ $500 million

• Mandatory Prepayment Trigger: If FDA Approval of Anaphylm is not obtained by December 31, 2027, the Lenders may require a partial paydown of the Term Loan (with the Minimum Liquidity threshold reducing dollar-for-dollar in tandem)

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

In December 2025, HawkEye 360, Inc., a commercial space-based signals intelligence (SIGINT) company, closed a coordinated $48.6 million debt package alongside the cash-and-stock acquisition of Innovative Signal Analysis, Inc. (ISA) and the initial close of an $80 million Series E preferred raise led by NightDragon. The debt package was bifurcated into a $14.6 million senior growth capital term loan from Silicon Valley Bank (First Citizens Bank) and a $34.0 million second-lien mezzanine term loan agented by SVB / First Citizens. This week’s L.O.T.W. is a two-parter; the senior facility and the mezzanine facility are reviewed in stacked sections below, followed by the shared covenant package.

👓At a Glance

Origination Date: December 18, 2025

Borrower: HawkEye 360, Inc.

Lenders:

• Senior Growth Capital Term Loan - Silicon Valley Bank (First Citizens Bank)

• Mezzanine Term Loan - First Citizens Bank (Agent)

Structure: $14.6 million senior secured growth capital loan + $34 million second-lien mezzanine term loan

Use of Proceeds: Fund cash portion of the $166.5 million ISA acquisition; transaction costs; general working capital

Source: SEC S-1

📷Borrower Snapshot

Sector: Information Technology

Subsector: Software

Commercial Stage: Revenue Generating; LTM EBITDA +

Business Overview: HawkEye 360 operates a commercial constellation of more than 30 satellites that collect radio frequency (RF) signal data and processes that data through proprietary AI/ML algorithms to deliver unclassified geospatial RF intelligence to defense, intelligence, and allied government customers. Founded in 2015 and headquartered in Herndon, Virginia, the company derives the majority of its revenue from U.S. Government and U.S. intelligence community contracts, with international customers contributing roughly 39% of revenue. Total revenue grew 74% in 2025 to $117.7 million (from $67.6 million in 2024), Adjusted EBITDA swung from negative $6.3 million to positive $24.8 million, and contracted backlog expanded nearly 7x to $302.7 million. The December 2025 acquisition of ISA, a Texas-based classified-cleared signal processing business, is intended to extend the company’s reach into the national security augmentation market by combining ISA’s classified architecture access and multi-domain detection capabilities with HawkEye’s commercial RF data stack.

⚙️Structure & Terms

Source: Growth Capital Term Loan Mezzanine Loan

Senior Term Loan

Lender: Silicon Valley Bank, a Division of First-Citizens Bank & Trust

Commitment: $14.6 million (single tranche, fully funded at close)

Maturity: September 1, 2028

Repayment: Interest only through December 2026 (~12 months I/O); 21 equal monthly installments of principal commencing January 1, 2027 through Maturity

Collateral: First priority lien on substantially all assets of Borrower and its subsidiaries; subject to Subordination Agreement with the mezzanine agent

Rate: Floating; Greater of WSJ Prime Rate and 6.75%

Equity Features - Senior: No new warrants issued at the senior level; the prior 2024 SVB warrant remains in place and was amended in connection with this restatement

Fees: None disclosed

Mezzanine Term Loan

Lenders: First-Citizens Bank & Trust (admin. agent and collateral agent) with participation from Silicon Valley Bank, and funds managed by Pinegrove and Hercules Capital

Commitment: $34.0 million (single tranche, fully funded at close)

Maturity: December 18, 2028

Repayment: 36 month I/O; Principal due at Maturity

Collateral: Second priority lien on substantially all assets of Borrower and its subsidiaries; subordinated under Subordination Agreement

Rate:

• Floating, Greater of WSJ Prime + 2.10% and 9.35%

• 1.50% per annum, compounded monthly, accruing as PIK amount and added to principal

Equity Features - Mezzanine: 173,591 common share warrants at $4.65 strike

Fees:

• Final Payment Fee - 1.95% of original aggregate principal amount of the Term Loan Advance, non-refundable and fully earned as of the Effective Date, payable to Agent for the ratable account of the Lenders upon repayment for any reason

• Prepayment Fee - Up to 1.00% of the principal amount repaid prior to the second anniversary of closing; expressly waived if the loan is (a) prepaid within 60 days of the consummation of an IPO, or (b) prepaid pursuant to the mandatory revenue leverage prepayment provisions

Financial Covenants:

• Minimum Liquidity: Borrower must maintain at all times unrestricted and unencumbered cash and Cash Equivalents subject to a Control Agreement in favor of the senior bank of at least $10,000,000 (tested monthly)

• Consolidated Revenue Leverage Ratio (debt / revenue):

  • On or before December 31, 2026: prepayment required if (i) Borrower cash drops below $50,000,000 and (ii) consolidated revenue leverage ratio exceeds 0.80:1.00 — to the extent needed to bring the ratio back to 0.80x

  • January 31, 2027 through December 31, 2027: maximum 0.70:1.00

  • January 31, 2028 and thereafter: maximum 0.60:1.00

• Equity Contribution Condition Precedent: $55 million minimum unrestricted gross cash proceeds from the Series E (or capital contributions in respect thereof) required to close

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

In December 2025, Lord Abbett PCF Financing 2 LLC, a wholly-owned, special purpose financing subsidiary of Lord Abbett Private Credit Fund (a Delaware statutory trust regulated as a BDC under the 1940 Act), entered into a $300 million* senior secured revolving credit facility with Royal Bank of Canada as administrative agent and lender. The facility is a classic “back leverage” structure for a private-credit BDC: the BDC originates and contributes loans into a bankruptcy-remote SPV; the SPV pledges those loans as collateral and borrows against them on a non-recourse basis.

*amended to $400 million on April 23, 2026

👓At a Glance

Origination Date: December 1, 2025 (subsequently amended on April 23, 2026)

Borrower: Lord Abbett PCF Financing 2 LLC

Collateral Manager: Lord Abbett Private Credit Fund

Collateral Agent & Custodian: Computershare Trust Company

Lender: Royal Bank of Canada (“RBC”)

Deal Size: Originally $300 million; upsized to $400 million in April ‘26

Structure: Senior secured revolving credit facility (”back leverage”) with multi-currency capability, 36-month reinvestment period, and 24-month post-reinvestment amortization

Rate: Floating rate benchmark per applicable currency + applicable margin of 1.60% / 1.80% / 2.00% per annum, depending on collateral category; 0.00% benchmark rate floor

Term: 60 month total term; 36 month revolving reinvestment period

Use of Proceeds: Acquisition of eligible loans from Lord Abbett Private Credit Fund; general business purposes of the SPV

Source: SEC 8-K

📷Borrower Snapshot

Sector: Financial Services

Subsector: Private Credit / Business Development Company (BDC)

Ownership: Borrower SPV: wholly owned by Lord Abbett Private Credit Fund; Parent Fund: non-traded BDC; common shares not listed on a national exchange

Commercial Stage: Total Investments at Fair Value - $1.3 billion as of 12/31/2025; 2025 Total Investment Income - $83.9 million; Net Investment Income - $41.1 million

Business Overview: Lord Abbett Private Credit Fund is a non-diversified, closed-end management investment company that elected to be regulated as a Business Development Company under the 1940 Act on October 4, 2024. It is externally managed by Lord Abbett Private Credit Advisor LLC, a wholly-owned subsidiary of Lord, Abbett & Co. LLC. The Fund’s investment objective is to generate current income and, secondarily, long-term capital appreciation by primarily focusing on directly originated, senior secured loans to U.S. middle market companies (private operating companies and public companies with market capitalization below $250 million). As of December 31, 2025, the Fund held investments in 45 portfolio companies with total investments at fair value of approximately $1,310 million (cost ~$1,312 million). Portfolio composition: 93% first-lien secured debt, <1% second-lien, <1% equity, and ~5% in the SBLA Private Credit LLC joint venture (with Stifel Bank & Trust); 100% of debt investments at floating rates; 0% on non-accrual.

Portfolio metrics as of 12/31/2025: Median 12-month EBITDA $76 million; weighted average net leverage 4.7x; weighted average loan-to-value 42%; weighted average interest coverage 2.2x; weighted average yield on debt investments at cost 9.3%.

⚙️Structure & Terms

Source: SEC 8-K

Commitment: $400 million revolving credit facility; 36-month reinvestment period and 24-month post-reinvestment amortization

Maturity: December 1, 2030

Currency Capability: U.S. Dollars or certain other permitted currencies (Canadian Dollars, Sterling, Euros, Australian Dollars, with corresponding RFR / Eurocurrency benchmarks: SOFR / CORRA / SONIA / EURIBOR-equivalent)

Rate: Floating rate per annum applicable to the currency, plus applicable margin (see below); rate floor of 0.00% per annum

Applicable Margin:

• Broadly Syndicated Loan - 1.60% per annum

• Private Credit Loan - 1.80% per annum

• Senior Secured Bond - 2.00% per annum

Advance Rate Grid:

• Broadly Syndicated Loan, Purchase Price > 85.00 - 75.00%

• Broadly Syndicated Loan, Purchase Price ≤ 85.00 - 70.00%

• Senior Secured Bond - 72.50%

• Private Credit / First Lien Loan: First-Out Attachment Ratio ≤ 7.00x AND Obligor LTM EBITDA ≥ $100M - 72.50%

• Private Credit / First Lien Loan: First-Out Attachment Ratio ≤ 6.00x AND Obligor LTM EBITDA between $25M and $100M - 70.00%

• Private Credit / First Lien Loan: First-Out Attachment Ratio ≤ 6.00x AND Obligor LTM EBITDA < $25M - 65.00%

• Private Credit / First Lien Loan: First-Out Attachment Ratio between 6.00x and 7.00x AND Obligor LTM EBITDA between $25M and $100M - 40.00%

• First Lien Last-Out Loan - 55.00%

• Recurring Revenue Loan - up to 55.00% (administrative agent sole discretion)

• Second Lien Loan - 40.00%

Asset Category Definitions:

• Broadly Syndicated Loan: Large, liquid, broadly held senior secured term loan typical of the BSL market.

• Private Credit Loan: Middle-market, directly originated, illiquid first-lien loan — the Fund’s strategic focus.

• First Lien Last-Out Loan: Unitranche-style first-lien loan subject to a payment-priority intercreditor that subordinates it to a “first-out” tranche.

• Second Lien Loan: Subordinated lien, with explicit second-priority intercreditor protections in the LSA.

• Recurring Revenue Loan: First Lien Loan underwritten on Recurring Revenue (not EBITDA), with the Obligor in a high-growth industry, LTV ≤ 40%, trailing 12-month Recurring Revenue ≥ $25M, and Net Debt to Recurring Revenue ≤ 3.0x.

• Senior Secured Bond: Senior secured note-format obligation (Moody’s “B3” / S&P “B-” minimum, or the Obligor itself meeting that threshold).

Other Notable Mechanics:

• Reinvestment Period: During the 36-month reinvestment period, the borrower may borrow, repay, and re-borrow advances, subject to satisfaction of the borrowing base, minimum equity amount test, and collateral quality tests. Each funding notice must include a pro forma borrowing base certificate.

• Post-RPED Amortization: Following the reinvestment period end date (RPED), all collections are applied first to operating priorities and then pro rata to repay advances outstanding until paid in full. The lenders are not obligated to make new advances after the RPED.

• Borrower Interest Coverage Ratio: Interest waterfall mechanic — during the reinvestment period, principal collections may flow to the interest collection account in an amount necessary to cause the borrower interest coverage ratio to be at least 120%.

• Revaluation Events: Extensive loan-level credit-event triggers that knock loans out of the borrowing base or trigger mark-downs, including Obligor payment default (5 BD cure period), insolvency event, material modification not approved by RBC, obligor cash interest coverage ratio < 1.50x AND ≤ 80% of original, net senior leverage ratio > 1.00x higher than original, failure to deliver financial statements within 30 days of due date, cash interest rate < Benchmark + 2.25%, broadly syndicated daily market value 10% below initial purchase price, and recurring revenue declines or LTM RR falling below $25M.

Covenants:

• Maintenance Covenant: Positive tangible net worth at all times (no quantitative threshold disclosed in 8-K narrative; standard fund-finance maintenance test).

• Borrowing Base Test: advances outstanding may not exceed the borrowing base on any date of determination. Any borrowing base deficiency triggers a mandatory paydown — the next dollar of interest collections and principal collections (after senior priorities) is applied to the advances outstanding until the Deficiency is reduced to zero.

• Minimum Equity Amount Test: First-loss equity in the SPV must satisfy the required equity investment formula at all times - tested as a condition to each advance.

• Collateral Quality Tests: Pro forma compliance required as a condition to each advance; collateral quality test definition, which typically includes weighted average coupon / spread, weighted average life, weighted average advance rate, and concentration limits by industry, single obligor, and asset category.

• Borrower Interest Coverage Ratio: During the reinvestment period, the waterfall directs principal collections to the interest collection account in an amount necessary to keep the borrower interest coverage ratio at or above 120% - functionally a soft covenant manifested as a waterfall mechanic.

Disclosed Fees:

• Non-usage Fee:

  • (i) None for the first 9 months after Closing Date;

  • (ii) From the 9-month anniversary to RPED: a daily-pricing waterfall calculated as (1/360) × applicable rate × (target utilization shortfall), where applicable rate is

    • 1.25% when advances outstanding < 50% of facility amount,

    • 0.75% when advances outstanding ≥ 50% but < 75%, and

    • 0.00% when advances outstanding ≥ 75%;

  • (iii) No non-usage fee from RPED to termination date

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

In April 2026, Emergent BioSolutions Inc. a specialty biopharmaceutical and biodefense company in the middle of a multi-year turnaround, closed a coordinated refinancing of its non-revolver debt stack. A new $150 million senior secured Term Loan from OrbiMed Royalty & Credit Opportunities V, LP was used to retire all amounts outstanding under the company’s August 2024 term loan with Oak Hill Advisors, with management citing a 200 basis point annual reduction in interest expense relative to the prior facility. Concurrently, Emergent and Wells Fargo executed Amendment No. 1 to the September 2024 ABL credit agreement, right-sizing the revolving commitment from $100 million to $50 million and pushing maturity out to match the new term loan.

👓At a Glance

Origination Date: April 16, 2026

Borrower: Emergent BioSolutions, Inc.

Term Loan Lender: OrbiMed Royalty & Credit Opportunities

• Term Loan - $150 million initial term loan; $75 million delayed draw term loan

• Uncommitted incremental facility equal to greater of i) $200 million or ii) 80% of trailing four-quarter consolidated EBITDA, plus additional leverage-based capacity

ABL Lender: Wells Fargo Bank

• ABL Loan - $50 million

Use of Proceeds: Repay and terminate the August 30, 2024 Oak Hill Advisors term loan facility; finance permitted acquisitions and growth capex

Source: SEC 8-K

📷Borrower Snapshot

Sector: Healthcare

Subsector: Biotechnology

Commercial Stage: Revenue Generating; LTM EBITDA +

Business Overview: Emergent BioSolutions is a Gaithersburg, Maryland–based specialty biopharmaceutical company focused on developing, manufacturing, and commercializing medical countermeasures and other products that protect against public health threats, with a 25-plus year operating history. Its commercial portfolio includes products targeting smallpox, mpox, botulism, Ebola, anthrax, and opioid overdose emergencies (most prominently the over-the-counter naloxone nasal spray franchise).

⚙️Structure & Terms

Source: SEC 8-K

Term Loan Agreement

Structure:

• Initial Term Loan - $150 million; drawn in full at close

• Delayed Draw Term Loan - $75 million; 24 month availability post-closing

  • DDTL Draw Condition - consolidated secured leverage ratio not to exceed 1.75:1.00

• Uncommitted Incremental Term Loan - Greater of $200 million or 80% of trailing four-quarter consolidated EBITDA, plus additional leverage-based capacity

Maturity:

• Earliest of (i) April 16, 2031, (ii) acceleration upon Event of Default, and (iii) 91 days prior to the scheduled maturity of the 3.875% senior unsecured notes due 2028 - but only if the aggregate principal amount of notes outstanding at such date exceeds $75 million and the company does not have liquidity equal to $75 million plus the amount necessary to repay the notes in full

Repayment: Bullet at maturity; no scheduled amortization

• 50% excess cash flow sweep (commencing with fiscal year 2027); with step-downs based on the company’s consolidated total leverage ratio

Collateral: First-priority security interest and lien on term loan priority collateral; second-priority security interest and lien on ABL priority collateral (split-lien intercreditor with the Wells Fargo ABL)

Rate: Term SOFR + 6.25% per annum, subject to a Term SOFR floor of 3.00% (resulting in an effective interest rate floor of 9.25%)

Disclosed Fees:

• Undrawn Fee - 1.00% per annum on the undrawn portion of the Delayed Draw Term Loan, payable quarterly during the 24-month availability period

• Make-whole - 3% plus present value of each interest payment through prepayment event and 2 year anniversary of closing; 3% from 2nd to 3rd anniversary; 2% from 3rd through 4th anniversary; par thereafter

Financial Covenant:

• Consolidated Total Leverage Ratio: Not to exceed 5.25:1.00, tested every fiscal quarter commencing with the fiscal quarter ending September 30, 2026

ABL Credit Agreement Amendment

Original Agreement: Credit Agreement dated September 30, 2024

Amendment: Amendment No. 1 to Credit Agreement, dated April 16, 2026

Post-Amendment Commitment: $50 million revolving loan commitment, with a customary letter of credit sublimit

Maturity: Earliest of (a) April 16, 2031, (b) 91 days prior to the scheduled maturity of the OrbiMed term loan, (c) 91 days prior to the scheduled maturity of the 3.875% senior unsecured notes due 2028

Collateral Position: First-priority lien on ABL priority collateral; second-priority lien on term loan priority collateral

Borrowing Base - Multi-Jurisdictional:

• The facility includes separate U.S., Canadian, and Irish borrowing base components, each with its own eligibility criteria and advance rates and aggregating into the global borrowing base.

Pricing Grid: Tied to consolidated total leverage ratio

• Level I - consolidated total leverage < 4.00:1.00; base rate margin = 0.75%; Term SOFR margin = 1.75%

• Level II - consolidated total leverage ≥ 4.00:1.00; base rate margin =1.25%; Term SOFR margin = 2.25%

Cash Dominion: Customary cash dominion mechanics - deposit accounts of the loan parties are subject to springing lender control. Upon an “application event” — defined to include (a) excess availability falling below a (redacted) threshold for a specified number of consecutive business days and (b) the occurrence and continuation of an event of default — collected funds are swept daily to the agent’s account and applied to outstanding obligations.

Financial Covenants:

• Fixed Charge Coverage Ratio: Springing maintenance covenant; tested only when excess availability falls below a specified threshold (threshold redacted) for a defined number of consecutive business days and continuing until excess availability is restored above the threshold for a specified period

• Minimum Liquidity / Consolidated Total Leverage Ratio: Liquidity floor / leverage ceiling covenant package (specific numerical thresholds redacted)

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

We start with Charles’s foundation at Union Bank, where learning to underwrite real businesses created an early framework for thinking about risk. From there, we move into his time with MUFG in Singapore, where he navigated cross-border lending, large multinational clients, and the realities of operating inside a global bank.

The conversation then shifts to Silicon Valley Bank, where Charles transitioned from the deal side into the credit seat—offering a candid perspective on what actually changes when you’re the one making the decision.

We spend time unpacking how credit gets structured in practice, how institutional incentives shape outcomes, and why collaboration between deal teams and credit is often the difference between getting a deal done—or not.

We close with one of the more practical takeaways from the episode: Charles’s “User Guide,” a simple but effective framework for how he approaches communication, expectations, and decision-making as a credit officer.

If you’re building a career in banking—or just want a clearer view into how credit decisions actually get made—this is a worthwhile listen.

In March 2026, Hyperfine, Inc. entered into a loan and security agreement with Horizon Technology Finance Corporation, providing a senior secured multi-tranche term loan facility of up to $40 million. Hyperfine drew $15 million at closing across three tranches, with the remaining $25 million available in five additional tranches of $5 million each through December 31, 2027, subject to conditions including a debt-to-annualized-revenue covenant. The facility carries a 48-month interest-only period that is extendable through maturity if Hyperfine hits a defined FY2027 revenue milestone.

👓At a Glance

Origination Date: March 18, 2026

Borrower: Hyperfine, Inc.

Lender: Horizon Technology Finance Corporation

Deal Size: Up to $40 million

Structure: Senior secured multi-tranche growth capital term loan

Rate: Prime + 4.25%; prime floor of 6.50%; minimum rate of 10.75%

Term: ~60 months

Use of Proceeds: Working capital and general corporate purposes

Source: SEC 8-K

📷Borrower Snapshot

Sector: Health Care

Subsector: Health Care Equipment & Supplies

Ownership: Public (Nasdaq: HYPR)

Commercial Stage: Revenue Generating; LTM EBITDA (-)

Business Overview: Hyperfine, Inc. is a medical device company and the maker of the Swoop® Portable MR Imaging System, the first FDA-cleared, AI-powered portable brain MRI system. Unlike conventional MRI, which requires shielded suites, high-cost infrastructure, and specialized personnel, the Swoop system operates at ultra-low field strength (0.064T) and is designed to be deployed at the point of care - bedside in ICUs, emergency departments, neurology offices, and community settings globally. The company’s proprietary Optive AI software, with 12 cumulative FDA AI-enabled clearances, enhances image quality through deep learning–based reconstruction, enabling clinical-grade imaging at significantly lower field strengths. Hyperfine has built an installed base of over 200 systems globally, generated approximately 250,000 images, and is actively expanding across three commercial verticals: hospital, office-based neurology, and international markets. The company holds approximately 200 issued patents and has reimbursement in place in the United States under existing CPT codes in both hospital and office settings.

⚙️Structure & Terms

Source: SEC 8-K

Commitment: Up to $40 million across 8 tranches of $5 million each

• Funded at Close: $15 million (loans A-C)

• Remaining Availability: $25 million (loans D-H), available through December 31, 2027

  As a condition to drawing any tranche after the closing date, total indebtedness to annualized revenue (on a consolidated basis) may not exceed 1.00:1.00 immediately after giving effect to the draw

Maturity: March 18, 2031

Collateral: Substantially all assets of Borrower and Guarantors; Intellectual Property excluded from collateral at closing but automatically included upon funding of first additional tranche after closing

Rate: Prime + 4.25%; prime floor of 6.50%; minimum rate of 10.75%

I/O Period: 48 months - extendable through Maturity if 2027 consolidated revenue equals or exceeds undisclosed threshold

Fees:

• Commitment Fee: 1% of total facility or $400k

• Final Payment: 5.0% of the aggregate original principal amount of Term Loans disbursed, due at payoff or maturity

• Prepayment: 3.0% if prepaid on or before 2nd anniversary of closing; 2.0% if prepaid after 2nd and on or before 4th anniversary; 1.0% if prepaid after the 4th anniversary

Warrants:

• 4.5% warrant coverage on initial funding

• Up to an additional 2.5% warrant coverage on additional tranches (if funded)

Financial Covenant:

• Min. Revenue Growth

• Min. Cash

Actual negotiated covenant thresholds are redacted in the loan agreement

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

On March, Turn Therapeutics Inc. (Nasdaq: TTRX) closed a growth capital term loan of up to $25.0 million with Avenue Venture Opportunities Fund II, L.P., a venture lending fund affiliated with Avenue Capital Group. The facility is structured in three tranches- an initial $7.0 million funded at closing, an $8.0 million second tranche conditioned on specified clinical and fundraising milestones, and a discretionary $10.0 million third tranche requiring advanced clinical progress and lender investment committee approval. The company indicated that the initial tranche is expected to extend its runway through a mid-year Phase 2 readout in moderate-to-severe atopic dermatitis, with proceeds from the full facility expected to extend the runway through the end of 2027. The agreement contains no minimum cash requirement or other traditional financial covenant; lender protection is built entirely into the milestone-gated tranche structure. Avenue received a $1.2 million equity grant at closing, a principal conversion option at a 20% discount to market, and a participation right in future equity rounds.

👓At a Glance

Origination Date: March 23, 2026

Borrower: Turn Therapeutics, Inc.

Lender: Avenue Capital Opportunities Fund II

Deal Size: $25 million

Structure: Multi-tranche growth capital term loan

Rate: Greater of (i) Prime Rate + 5.50% or (ii) 12.25% per annum (variable with floor)

Term: ~42 months

Use of Proceeds: Extend runway through mid-year Phase 2 atopic dermatitis readout and support preparation for registrational trials; full facility expected to extend runway through end of 2027

Source: SEC 8-K

📷Borrower Snapshot

Sector: Healthcare

Subsector: Pharmaceuticals

Ownership: Public (Nasdaq: TTRX)

Commercial Stage: Pre-revenue

Business Overview: Turn Therapeutics Inc. (corporate entity: Global Health Solutions Inc. dba Turn Therapeutics) is a clinical-stage dermatology company developing novel therapies for inflammatory skin diseases. Its lead compound, GX-03, is in active development for two indications: moderate-to-severe atopic dermatitis, where a Phase 2 trial is ongoing with a mid-year 2026 readout anticipated, and onychomycosis, where encouraging data from independent investigator-sponsored studies has supported advancement into Phase 3.

⚙️Structure & Terms

Source: SEC 8-K

Commitment: Up to $25.0 million

• Tranche 1: $7.0 million funded at close

• Tranche 2: up to $8.0 million

• Discretionary Tranche 3: up to $10.0 million

Maturity: October 1, 2029

Collateral: First priority lien on all assets, including intellectual property

Rate: Greater of (i) Prime Rate + 5.50% or (ii) 12.25% per annum; variable rate calculated on a 360-day year basis

Fees:

• Commitment fee: 1.00% of total commitment ($150,000; $50,000 of which was previously paid as an advance deposit)

• Final payment: 3.75% of aggregate funded loan amount, due at maturity or upon full prepayment

• Prepayment fee: 3.0% of outstanding principal if prepaid in year 1; 2.0% in year 2; 1.0% after year 2

Equity Features:

• Equity Grant: $1.2 million of common stock issued to lender at closing, calculated at the 5-day VWAP of TTRX common stock preceding the closing date

• Conversion Option: Lender may convert up to $2.0 million of outstanding principal into TTRX common stock at a 20% discount to the closing price of the common stock on the date of exercise; the maximum principal amount eligible for conversion increases to $3.0 million if and when Tranche 2 is funded

• Participation Right: Lender may invest up to $1.0 million in future equity financings on the same terms offered to other investors (excluding existing shelf registration statements and ATM transactions)

Financial Covenants:

• None

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.

In March 2026, Solaris Energy Infrastructure, LLC — the operating subsidiary of publicly traded Solaris Energy Infrastructure, Inc. (NYSE: SEI) — closed a $300 million senior secured 364-day term loan arranged by Goldman Sachs Bank USA and Banco Santander, S.A., New York Branch. Proceeds were used to retire the company's existing Bank of America ABL facility, fund the concurrent acquisition of Genco Power Solutions, and provide working capital as the company executes an aggressive capacity expansion targeting approximately 3,100 MW of total power generation by end of 2029.

👓At a Glance

Origination Date: March 16, 2026

Borrower: Solaris Energy Infrastructure, LLC (OpCo); Solaris Energy Infrastructure, Inc. (Parent / Guarantor)

Lender: Goldman Sachs Bank USA (Administrative Agent & Collateral Agent); Banco Santander, S.A., New York Branch (Joint Lead Arranger & Joint Bookrunner)

Deal Size: $300 million

Structure: Senior Secured Term Loan (364-day, bullet)

Rate: Term SOFR + 3.00% or Base Rate + 2.00% (0.00% floor)

Term: 364 days

Use of Proceeds: Refinance Bank of America ABL facility; fund Genco Power Solutions acquisition; fees and general corporate / working capital purposes

Source: Press Release

📷Borrower Snapshot

Sector: Energy

Subsector: Energy Equipment and Services

Ownership: Public - NYSE: SEI

Commercial Stage: Revenue Generating; LTM EBITDA +

Business Overview: Solaris Energy Infrastructure, Inc. is a Houston-based power generation and distribution company that delivers mobile, natural gas-fueled turbine capacity, power distribution equipment, and logistics services to data center operators, energy companies, and commercial and industrial customers. The company's core value proposition is the ability to deploy large-scale power generation capacity rapidly — addressing supply-demand imbalances that traditional utility infrastructure cannot solve on short timelines. On March 16, 2026, Solaris closed two concurrent transactions adding approximately 900 MW of incremental capacity: the acquisition of Genco Power Solutions (approximately 400 MW of distributed capacity) and the assumption of 30 turbine delivery slots from Colusa Power Infrastructure Partners / Baker Hughes (approximately 500 MW). Upon full delivery, the company expects to operate approximately 3,100 MW of total power generation capacity by the end of 2029, up from its current approximately 2,200 MW base.

⚙️Structure & Terms

Source: SEC 8-K

Commitment: $300 million (single tranche, fully funded at close)

Maturity: March 15, 2027

Collateral: First priority lien on substantially all assets of Borrower and subsidiaries; Parent (SEI, Inc.) and all material subsidiaries are co-obligors

Rate: Term SOFR + 3.00% or Base Rate + 2.00%; floor of 0.00%

Repayment: Bullet at Maturity

Fees:

• Duration fee: 0.50% of outstanding principal at day 90 post-close

• Duration fee: 0.75% of outstanding principal at day 180 post-close

• Duration fee: 1.00% of outstanding principal at day 270 post-close

• Additional fees per fee letter (not disclosed)

Financial Covenant:

• Interest Coverage Ratio: Minimum 3.00x (EBITDA / interest expense), tested quarterly beginning Q2 2026 (fiscal quarter ending June 30, 2026)

• Total Leverage Ratio: Maximum 5.25x (net debt / EBITDA), tested quarterly beginning Q2 2026; upon consummation of the Genco Acquisition, ratio is increased by 0.25x (to 5.50x) for the four fiscal quarters immediately following closing

• Secured Leverage Ratio: Maximum 3.50x (net secured debt / EBITDA), tested quarterly beginning Q2 2026

• Minimum Unrestricted Cash: Not less than $50 million at all times

Disclaimer: The content in this newsletter is for informational purposes only and doesn’t constitute investment advice. All opinions are my own and not a recommendation to buy or sell any security. Please do your own research.