If you are a business owner who is looking for growth capital, you may be wondering if you are eligible for Preferred Equity Finance (PEF). In this blog post, we will discuss what Preferred Equity Finance is and who is eligible for it. We will also explain how does preferred equity finance work and how you can benefit from it.
What is Preferred Equity Finance and who is eligible for it?
Preferred Equity Finance (PEF) is a type of financing that is designed for businesses that have strong fundamentals, but may not meet the traditional lending criteria of banks or other financial institutions. Your business must be in good standing with no major financial or legal issues.
If you meet these criteria, you may be eligible for PEF. This type of financing can provide you with the growth capital you need to expand your business and take it to the next level.
How does Preferred Equity work and how can you benefit from it?
Preferred Equity is a type of financing that allows you to sell a minority stake in your business to an investor in exchange for growth capital. The investor will receive preferred shares in your company, which means they will have priority over other shareholders if the company is sold or liquidated.
The benefits of this type of financing include:
- You retain control of your company: Unlike selling a majority stake in your company to venture capitalists, with PEF you will still maintain control of your business. This is because the investor only owns a minority stake in the company.
- You get growth capital without taking on debt: With PEF, you can raise capital without taking on debt. This is important because it means you will not have to make regular loan payments, which can free up cash flow for other purposes.
- You can dilute existing shareholders: If you are looking to raise capital but do not want to dilute the ownership of existing shareholders, PEF can be a good option. This is because the investor will only own a minority stake in the company.
The process of applying for Preferred Equity and what to expect
If you think PEF is right for your business, the next step is to apply for it. The application process is relatively simple and straightforward. You will need to provide some basic information about your business, such as your financials, business model, and growth plans.
Once you have submitted your application, the investor will review it and decide if they are interested in investing in your company. If they are, they will provide you with an offer. The offer will include the amount of money they are willing to invest, the percentage of ownership they will receive, and the terms of the investment.
Once you have received an offer, you can decide whether or not to accept it. If you do accept it, you will sign a contract with the investor and receive the growth capital you need to expand your business.
Are you eligible?
PEF can be great option if you fit the criteria. If you think this might be the case, it’s worth speaking to a suitable non-traditional lender today.
