There are a variety of financing options available, including:

• Bank Financing
• Mezzanine Debt
• Equity Investment
• Vendor Take-Back Loan (VTB)
• Shareholder (Buyer) Equity or Loans

Your RBC^® Commercial Account Manager can advise you on the financing options designed to support the unique needs of the business acquisition.

Bank Financing

• most affordable and easiest to acquire
• available through operating loans secured against accounts receivable and inventories
• also available through term loans, leasing and commercial mortgages to finance capital assets (real estate, machinery)

Mezzanine Debt

• also known as subordinated debt
• may be appropriate for businesses that are highly leveraged or those that lack the business assets to finance through bank financing alone
• carry higher fees and rates and may require giving up some ownership interest

Equity Investment

• suited to companies that operate with limited tangible assets or those that have maximized their borrowing potential
• investors become partners in the business with decision-making rights
• future business’ profits repay the investor

Vendor Take-Back Loan (VTB)

• seller supports the financing of the acquisition in the form of a loan or becomes an investor in the business
• ideal for business owner who does not need immediate access to funds and wants to retain some control over the transition of the business
• seller will continue to bear some of the risk of the business

Shareholder (Buyer) Equity or Loans

• buyer uses personal funds to finance the acquisition, either in whole or in part
• buyer may have to borrow – the resulting loans may be secured against personal assets
• the amount of the buyer’s equity will also be a factor in determining other financing options