For more mature entrepreneurial firms with established assets and cash flow, assuming senior debt is a way to access growth capital without trading away equity in the company.
Senior debt is a form of secured loan that gives the lender priority status over other creditors. It is typically repaid in installments, often at interest rates below prime based on the collateral assets and financial performance of the company.
Senior debt carries perhaps the least risk of any entrepreneurial financing, as only stable and solvent firms qualify and the lender is guaranteed repayment before other debts. It is the opposite end of the funding spectrum from angel and other seed investment.
As the economy recovers and credit markets loosen, financial institutions in Indiana and across the country should expand access to small business financing, including senior debt. Private mezzanine funds may also issue secured loans that are senior to all debt except traditional bank loans. Learn more at SBA.gov, with a list of active lenders in Indiana here.