CFOs spend months, even years, structuring the perfect financing. Negotiating terms. Navigating lender demands. They’re laser-focused on getting the best possible terms.

Then, too often, it hits them: The deal they worked so hard for is actually working against them. Raising capital isn’t just about getting a deal done—it’s about getting to the right deal. A seemingly minor misstep overlooked in the rush to close can restrict cash flow, cripple flexibility, inflate costs, or create unforeseen roadblocks precisely when the company needs capital most.

Even the most experienced finance chiefs can fall into avoidable traps, from fixating on interest rates while ignoring the fine print, to overlooking the impact of seemingly minor covenants. These are just a few of the hidden pitfalls that can derail even the smartest financial strategies. And in the current marketplace—where capital is more expensive—the margin for error is razor-thin.

Here’s a look at the biggest mistakes made when raising capital—and how to avoid them.

1) Over-Fixating on Interest Rates

THE MISTAKE

Many CFOs chase the lowest interest rate without recognizing how tight covenants and structural limitations can ultimately cost far more in missed business opportunities. Think of capital as renting money for a specific period of time—focusing solely on the “rent rate” while ignoring flexibility can be shortsighted. As your situation improves, you can always refinance at better rates; however, a missed growth opportunity is far harder to recapture.

THE DOWNSIDE

The real cost of capital isn’t just the rate—it’s the strings attached. Saving a fraction of a percentage point may mean facing covenants that limit how you use insurance proceeds (for instance, requiring immediate paydown of debt instead of allowing you to rebuild), or demanding lender approval any time you want to buy or sell equipment.

You might also find yourself restricted on capital expenditures, blocked from reinvesting in plant upgrades, or forced into time-consuming reporting requirements. All these constraints can stifle your agility in the face of new contracts or sudden market changes—ultimately costing you more than any interest-rate savings.

THE RESOLUTION

With private credit markets evolving rapidly, there are often multiple ways to access both competitive rates and more flexible terms. Success requires looking at loan agreements holistically—beyond interest rates—and negotiating for the operational freedom you need. If you can secure the capital required to solve your key business challenges and remain nimble, don’t let a slight difference in percentage points distract you from a more suitable structure.

2) Focusing Only on Financial Covenants (and Missing Other Critical Restrictions)

THE MISTAKE

Many CFOs treat loan covenants as a box to check rather than a critical risk factor—until they realize (too late) how operationally restrictive they can be. This is doubly true for manufacturers, where covenant risks go well beyond straightforward debt-to-EBITDA ratios. Provisions around equipment financing, insurance proceeds, inventory management, and asset disposal can be just as important—if not more so—than traditional financial metrics.

THE DOWNSIDE

Even a minor covenant breach can trigger outsized consequences: penalty interest rates, forced repayment demands, restricted credit access, or the need to pledge more collateral. For a manufacturer balancing capital expenditures, insurance claims (after accidents or weather events), and routine asset turnover, a lender’s right to seize proceeds or block reinvestment can be devastating. A seemingly safe leverage ratio also offers false comfort if revenue falls off temporarily or you face unforeseen costs. You can remain “profitable” on paper but still be out of compliance—potentially compromising your ability to finance growth, pay dividends, or negotiate new contracts.

THE RESOLUTION

CFOs should go beyond passive compliance and actively monitor all covenants—financial and operational—in real time. Model different what-if scenarios (e.g., a dip in sales or an unexpected capital outlay) to see how quickly you could slip out of compliance.

Before signing, negotiate operational covenants that allow enough headroom to accommodate asset purchases or reinvestment when needed, and confirm that your capex limits won’t impede modernization efforts.

Finally, engage proactively with lenders: a transparent, early conversation about your plans or potential shortfalls is far more likely to yield workable solutions and waivers than a last-minute scramble after a breach.

3) Underestimating Third-party Diligence (and Execution) Hurdles

THE MISTAKE

Many CFOs see lender-required documentation as routine paperwork, not realizing how extensive due diligence can stall deals for weeks—if not months.

Middle-market manufacturers, in particular, face extra scrutiny around collateral validation, environmental assessments, customer contract reviews, and more. What looks like a quick, two-week process can easily become a two-month ordeal, especially when you add in bank approval processes and third-party diligence like equipment appraisals or quality-of-earnings reports.

Compounding the problem is waiting too long to seek financing: if your loan matures in less than 12 months, it may be reclassified as a current liability, weakening your balance sheet just when you need the best terms.

THE DOWNSIDE

These delays don’t just eat up time; they ripple through operations and can drive up costs. Legal fees, lender upfront fees, equipment appraisals, and environmental studies can quickly total hundreds of thousands of dollars. A manufacturer budgeting a few weeks to finance a major contract may suddenly confront multiple rounds of inspections and appraisals—stretching out the timetable and risking missed growth opportunities.

Middle-market firms that haven’t assembled key diligence materials in advance often face even longer delays and higher costs, as lenders or consultants scramble to fill in the gaps.

THE RESOLUTION

Treat the documentation process as a strategic priority, not an afterthought. Being “documentation ready” means having up-to-date appraisals on machinery, clean environmental reports on older facilities, accurate inventory and receivables data, and organized financial statements.

If you’re a manufacturer, leverage asset-rich collateral (machinery, real estate, or inventory) to secure better financing terms—but remember that lenders will want clear, verifiable data.

And start planning early: deals often take months to close, and waiting until your debt is almost due forces you into rushed (and usually costlier) solutions. By anticipating hurdles, you can move faster and negotiate better, beating competitors who are still gathering paperwork.

4) Lack of a Backup Capital Plan

THE MISTAKE

“Always have a Plan B”—it’s a simple principle, yet many CFOs neglect it when it comes to capital planning. Bank of America forecasts that private credit defaults could climb as high as 4% in 2025 as 2021-vintage deals mature. This projection underscores that even a seemingly stable financing environment can shift rapidly, leaving companies vulnerable if they rely on a single source of capital.

CFOs who assume their current financing will remain available indefinitely overlook how quickly lender appetites can shift due to economic headwinds or sector-specific concerns. For instance, while banks might pull back in certain industries, private credit players may be more willing to extend debt—often at rates far cheaper than selling a minority equity stake.

However, a backup plan goes beyond merely knowing a few alternative lenders; it also means anticipating lender surprises and being prepared to provide full transparency if your business hits a snag. If negative news emerges and you haven’t earned your lender’s trust—or you lack a second or third option in your back pocket—you could find yourself scrambling for capital under less favorable terms.

THE DOWNSIDE

In today’s fast-moving environment, markets shift faster than ever. A sudden downturn, supply chain shock, or the loss of a key customer can trigger immediate capital needs and instant change in a lender’s risk appetite. Without a backup plan, CFOs face emergency funding at higher rates—or worse, no funding at all.

Meanwhile, failing to anticipate lender concerns (or trying to hide negative developments) can escalate the problem. Good lenders conduct detailed diligence; if they discover material issues on their own, trust erodes quickly, and your main credit lifeline might be cut off just when you need it most.

THE RESOLUTION

A backup capital plan isn’t a luxury—it’s a necessity. Successful CFOs diversify funding sources by maintaining multiple lending relationships and evaluating alternative financing structures (e.g., asset-based lending, equipment financing, or private credit). More importantly, they’re transparent with lenders—proactively disclosing issues before they surface in due diligence.

Addressing potential red flags early usually results in far more workable solutions and waivers than a last-minute scramble after a breach. The best time to secure backup financing is before you need it: that’s when you have negotiating leverage, time for thorough evaluation, and the ability to present your business in its best light.

By thinking ahead, you ensure your company remains agile and resilient in the face of volatility—and you can seize new opportunities while competitors are left searching for capital.

5) Failing to Tell Your Company’s Story Effectively

THE MISTAKE

Some CFOs mistakenly believe that focusing solely on strong balance sheets, interest rates, and key metrics will secure a deal—overlooking the need to share the full story behind the numbers. Remember, your financing might need to win over as many as 15 decision-makers—and if even one person can’t see a clear path to repayment or understand your company’s strategic strengths, the deal could fall apart. In fact, simply handing over financials without context leaves gaps that lenders may fill with worst-case assumptions.

THE DOWNSIDE

Without a clear, compelling story, approvals can stall or come with excessively tight terms. Lenders want to know who you are, what drives your revenue, where your risks lie, and how you plan to handle them. If you can’t provide detailed financials and analysis before receiving funding, lenders will question whether you’ll ever do so after the money is in hand—leading to tougher reporting requirements or restrictions. In the end, a hazy story can undermine trust, drive up your cost of capital, and put critical growth initiatives at risk.

THE RESOLUTION

Treat your business narrative as seriously as your interest rate:

• Outline why your company is a smart bet—covering its market position, competitive advantages, and future prospects.
• Show how you plan to use the capital, what measures are in place to protect cash flow, and when you’ll generate returns.
• Back it up with timely and accurate data—organize all statements, forecasts, and operating metrics well ahead of the financing request.

By presenting lenders with a complete, transparent view of your business, you build confidence among every decision-maker—whether you meet them directly or not. This kind of clarity makes it far more likely you’ll secure flexible, growth-oriented financing on favorable terms.

Take the Next Step

Navigating the capital-raising process is complex, and even the smallest missteps can have long-term consequences. To secure financing that truly aligns with your business strategy, you need the right partner—one that not only understands the nuances of middle-market lending, but can help you leapfrog your competition with more efficient processes and greater reach to a varied group of lenders.

That’s where CAPX comes in. As the leader in matching middle-market companies with right-fit lenders, CAPX streamlines the process, helping you access the capital you need—on the terms that work for you. Connect with us today to take the next step toward smarter, more strategic financing.

The post CFO Strategy Session: Five Capital-Raising Mistakes You Won’t Realize Until It’s Too Late appeared first on CAPX.

Jeffery Wacker Joins CAPX

Industry Veteran to Drive Growth and Expand Market Reach

Today, CAPX announced that Jeffery Wacker has joined the company as Senior Advisor. Based in Connecticut, Jeff will work closely with CAPX founder Rocky Gor to expand the CAPX user base among mid-market companies, private equity firms, and independent sponsors, particularly on the East Coast. 

Jeff’s addition comes as CAPX continues to build a smarter and more transparent pathway to creating a more effective and efficient corporate financing environment for borrowers and lenders alike. 

“Now is the time to bring companies in need of capital a much greater set of options, much more efficiently,” said Jeff. “Rocky’s vision to do just that has consistently impressed me. I’m looking forward to rolling up my sleeves and working with him to make this much-needed industry change a reality.”

Jeff’s leadership experience includes national-level and senior roles with top-tier financial institutions, including Webster Bank, TD Bank, SunTrust and GE Capital. In particular, Jeff has significant experience growing and expanding financial services offerings as a strategic business leader.

“Jeff is a business-catalyzer,” said Rocky Gor, Founder of CAPX. “His track record with top-tier institutions, paired with deep industry knowledge, make him an invaluable addition to CAPX as we continue to redefine corporate borrowing and expand our market reach. We are thrilled to welcome him to the team.”

About CAPX

CAPX is the ultimate portal for borrowers seeking debt financing across the United States. No longer do companies need to rely solely on existing or local relationships—CAPX connects them with lenders that specialize in their industry and geography, transforming their financing options. CAPX has obtained capital solutions for more than $1.5B in corporate loans.

The post Jeffery Wacker Joins CAPX appeared first on CAPX.

For CFOs considering non-bank financing options, understanding core differentiators for a firm like Caltius—from due diligence approaches to ongoing partnership expectations—has become increasingly crucial in today’s market. 

Watch the full discussion below to learn how Caltius looks at companies seeking capital, and just how important effective communication on both business resilience and strategic vision are to a company’s capital raise process.

An edited transcript is below.

Interested in learning how CAPX can help your company engage with firms like Caltius? Get in touch with us here.

Edited Transcript

Rocky Gor: Can you tell us about yourself and your firm?

Michael Kane: The firm goes back 28 years, starting with our first fund of $41 million. We’re currently investing out of our sixth fund, which is about $400 million. The last four funds have been about the same size, so we’re leveling out. My background includes education at Rice University in Houston and six years with GE Capital, which moved me from Texas to Los Angeles 35 years ago. The three of us co-founders got together almost 28 years ago with that first fund, and we’ve been doing structured finance and lower-middle-market mezzanine debt since then.

Gor: What differentiates you from other firms in this space?

Kane: Going back to our early days with that $40 million first fund, where our average deal size was about $3.5 million, none of our transactions involved private equity groups because they weren’t doing deals that small. We became proficient at conducting our own due diligence to work directly with management teams and family offices. While we now do about 20% of our deals with private equity funds and appreciate their thorough diligence process, our core strength remains in conducting our own diligence for lower-middle-market deals. We might use smaller accounting firms for efficiency, but we’ve developed comfort with this approach over the years…. We also almost never take a board seat—typically just a board observation seat, which sets us apart from others. 

Gor: Based on my GE Capital experience, the difference between working with middle-market or family-based companies versus PE firms is really how much more collaboration with management is required. It’s more of an in-the-trenches approach versus getting a prepared package (with private equity). It’s a different process, mentality, and requires different levels of patience.

Kane: Exactly, and these deals are harder to find and structure. If you wanted to be a large SBIC debt fund or structured capital fund and grow quickly, you’d focus on PE firms because of their larger check sizes. Non-sponsored deals are harder to find. We really try to partner with management. Sometimes people question our approach because we don’t have control or a control investor. Once we do a deal, we’re effectively partnered with that entrepreneur, which is something we have to carefully diligence as part of our core underwriting strategy.

Gor: What’s your current fund size and typical deal size?

Kane: Our current fund includes both an SBIC fund with government leverage and a non-SBIC fund. Some of our long-term institutional investors prefer investing without the SBIC leverage for more flexibility. Together, they total $400 million. Across our six funds over 28 years, we’ve managed about $1.8 billion, with Fund Six currently about 50% invested (plenty of dry powder). Our deal size typically ranges from $10 to $45 million per transaction.

Gor: Can you describe your ideal deal?

Kane: Looking at our history, which is available on our website, we focus heavily on business services and asset-light companies. We don’t do many big industrial deals because we prefer the cash flow dynamics and enterprise values. We’re clearly an enterprise value cash flow lender/investor, not asset-based. Most of our portfolio companies are asset-light businesses “where the assets go home at night.” We typically focus on non-change-of-control deals: growth capital, management buyouts, or one partner buying out another. We’ve had great success with deals where insiders leverage the company and roll their equity, and with employee-owned companies.

Gor: How do you address concerns from entrepreneurs and family-owned companies who might be hesitant to work with a lender they don’t have an existing relationship with? How do you handle situations where companies face challenges?

Kane: Over our 28-year history working with employees and management teams, we’ve built a strong track record. While not every deal has been perfect, we’ve managed to minimize losses. We’ve developed deep relationships—I’ve attended weddings and bar mitzvahs of our CEOs’ children. Perhaps most telling is that in our sixth fund, we have about 40 individual investors who are predominantly managers or former managers of our portfolio companies. We started this in Fund Four, offering them lower minimums than other investors. Across Funds Four, Five, and Six, we’ve had well over 100 portfolio company managers invest with us, some multiple times.

We encourage potential borrowers to review our portfolio and connect with our management teams, particularly those in related industries. We always provide references to companies that have experienced challenges because it’s easy to be a good partner when everything’s going well—but most companies will go through bumps in the road. 

For example, we currently have a company facing challenges where their senior lender wants to exit. We’ve offered a fund guarantee to provide comfort to the bank because we believe in the management team’s efforts despite headwinds in the industry (which we recognize). This is a vote of confidence for the company when it needs it, and provides a solution to all parties involved. 

Gor: How do you source these opportunities (besides getting them from CAPX)?

Kane: Our 28-year track record helps people find us when they have deals in our size range. We see the majority of deals west of the Rockies, and we now have two full-time business development people—one in LA and one in Boston. They focus on networking and bringing in team members like myself when needed. I still maintain my network, particularly in Texas where I started my career.

Gor: What’s your process when you receive a deal, and how reliable are your term sheets because of the process?

Kane: We don’t issue term sheets without substantial preliminary diligence. While this might cost us some deals due to timing, we want to speak with management and the banker first. We meet every Monday morning to review potential deals, and we don’t issue term sheets until we’ve developed a two-page “teaser” analysis outlining our core underwriting approach. This includes proposed pricing, debt versus equity structure, and allowed senior debt levels. Once the team approves, we issue the proposal. In our history, we’ve never failed to perform on a proposal where the company delivered what was represented, though we have walked away from deals during diligence when we’ve uncovered issues.

Gor: What deal type trends are you seeing in the market these days?

Kane: It’s definitely gotten harder to close deals and the process takes longer. COVID’s impact varies by company—some benefited while others were crushed—and we need to understand if these effects are temporary. Current challenges include understanding the impact of tariffs on various industries and products. For certain businesses, this creates additional complexity in underwriting, but that’s what groups like ours get paid to do: find deals, underwrite them properly, and perhaps structure them with less initial capital until uncertainties resolve.

Gor: What advice would you give to CFOs and CEOs preparing to pitch to you?

Kane: For a first call, we want to understand the use of proceeds (how much do you need and for what)—whether it’s for an acquisition, owner dividend, or management buyout. We want to hear what excites you about the business going forward and what risks you see in your business plan. With non-PE companies, we often help them develop institutional-quality reporting that would appeal to PE firms, preparing them for potential future transactions. The first call is about getting to know each other and determining if there’s a mutual fit.

Gor: In terms of introducing something like CAPX to this process: as you know, when you use CAPX, the teaser deck comes to you capturing the information you are looking for from that first call. The CFO and/or CEO inputs that information, and we work with them to create that teaser deck. 

Kane: That certainly represents our experience with CAPX, and it’s a process that makes it easier for us to decide whether a given deal is something we want to spend time on. It does help to have CAPX sifting through the information coming from the company and putting it into an easily-digestible format. 

Gor: What distinguishes you from traditional banks?

Kane: The first thing borrowers notice is that we’re more expensive than banks, but we offer greater flexibility in terms of capital amount, looser covenants, and no amortization for five years. We never require personal guarantees, which many commercial banks do even for larger companies. We work well with commercial banks—our SBIC fund has about 25 bank investors. We don’t compete for working capital lines or cash management services; we’re just taking some credit risk off their plate. When talking to CFOs who have long-term banking relationships, we position our cost against equity—helping them understand the trade-offs there.

Gor: What’s your key advice for companies starting their capital raise process?

Kane: It’s crucial to have a thorough understanding of your own business information and be honest about both positives and negatives. Many entrepreneurs understand their business well but might not grasp what’s important to outside investors or lenders. Having a good handle on both the numbers and your business’s position in the broader environment is vital. We can usually assess how comfortable we’ll be within a call or two, and having well-organized information from the start makes the process much smoother. Again, this is something where CAPX is a great asset for us: if CAPX can’t glean that information from a company, that’s a problem. 

Gor: Typically, when we find that a company is missing critical information, we go back and ask for it and help management get the right information in there to go out to lenders. 

This version of the transcript has been edited for style and clarity. 

The post CAPX Lender Q&A: Caltius Structured Capital’s Michael Kane appeared first on CAPX.

In this conversation, CAPX founder and former lender Rocky Gor joins CAPX Senior Advisor and corporate banking veteran Scott Glassberg to break down just how complex the review and approval processes can get, how rigid the steps can be, and a full tally of the number of people who may “touch” the deal.

The net-net? There are more considerations to make—and stakeholders to reach indirectly—than you may realize.

Watch the full discussion here:

Interested in discussing how to approach pitching your next financing deal? Get in touch with Rocky and Scott.

The post Beyond the Banker: Who Really Decides Your Deal? appeared first on CAPX.

But advances in technology mean fintech can finally make inroads on credit markets’ tough shores. CAPX aims to tackle the inefficiencies that plague this industry. We don’t just simplify complex processes; we utilize technology to create smarter pathways to financing and deliver real-time transparency for borrowers and lenders alike. Our mission: to enable capital to flow smarter, faster, and more equitably.

Here are the pillars that shape everything we do:

Transparency: Bridging the Information Gap

The credit market has long been plagued by a lack of transparency. Borrowers often struggle to understand lenders’ requirements, while lenders face challenges sourcing qualified deals. This opacity drives higher costs: borrowers end up paying more for capital while lenders spend more to find the deal.

CAPX addresses this fundamental issue by creating a platform where all participants work from the same information. By democratizing access to critical data and insights, we reduce information asymmetry and foster a frictionless market. Transparency doesn’t just benefit individuals—it elevates the entire industry, making it more efficient, equitable, and dynamic.

Efficiency: Streamlining Time and Cost

Time is money, and traditional methods of securing financing—lengthy negotiations, repeated due diligence processes, and extensive networking—consume valuable resources. Put another way: the current way companies secure financing sucks up time from highly skilled and expensive resources (e.g. CFOs, bankers, lawyers, etc.) on mundane tasks that can and should be automated.

CAPX does that: we automate key steps and expedite deal flow. Borrowers can explore and secure the right-fit financing faster, while lenders can efficiently source and evaluate opportunities.

Expertise: Guiding the Way to Smarter Financing

Once you’ve freed up their time from data analysis and lengthy processes, your top experts can focus on higher-value (and more complex) work. CAPX puts that expertise in hyperdrive, empowering both borrowers and lenders with our own comprehensive understanding of deal structures, lender preferences, and financing trends.

Borrowers gain clarity on what deals are feasible and optimal, while lenders can confidently identify opportunities aligned with their risk appetite and goals.

Innovation with Impact: Leveraging Technology to Drive Change

At CAPX, we don’t invest in innovation for the sake of being cutting edge—it’s about making tangible, marked differences in how the credit market operates. Our platform leverages advanced algorithms and latest software technologies to match borrowers with the most suitable lenders, considering unique business needs and market conditions. By codifying and automating expertise that was once dispersed and manual, CAPX ensures that all participants can make informed decisions with confidence.

This technological approach allows CAPX to remove unnecessary friction, optimize workflows, and drive better outcomes for everyone involved. In a market ready for disruption, CAPX’s innovation delivers not just efficiency, but transformative impact.

Join CAPX in Shaping the Future

At CAPX, we believe in a future where technology empowers both lenders and borrowers to make smarter, faster, and more informed decisions. By championing expertise, transparency, and efficiency, we’re not just solving longstanding frustrations in the credit market—we’re setting a new standard for what’s possible.

Join us in transforming the credit market and unlocking its full potential. Together, we can create a financial ecosystem that’s optimized, equitable, and poised for growth.

Get in touch to learn how CAPX can help you unlock the credit markets.

The post The Inefficiency Trap: Why CAPX Matters appeared first on CAPX.

Banks and private credit funds each bring distinct approaches to middle-market lending. Together, they represent a vast universe of capital solutions—each with their own qualification criteria, relationship requirements, and structural preferences.

This dual-track lending environment marks a stark departure from the straightforward bank relationships of decades past. Today’s CFO must simultaneously court multiple banks while evaluating an expanding universe of private credit options, each bringing distinct advantages and constraints to the table. The challenge isn’t just finding capital—it’s finding the right capital at the right terms without exhausting precious time and resources.

The complexity stems from structural shifts following the 2008 financial crisis. As banks adjusted to heightened regulatory scrutiny, private credit stepped in aggressively, creating today’s bifurcated market. While this expansion of options benefits borrowers, it demands sophisticated navigation of both traditional and alternative lending channels.

The lending revolution for middle-market companies paved the way for CAPX, designed to bridge this divide by streamlining connections with both banks and private credit funds. This innovation transforms a process that once took weeks into a streamlined 72-hour matching system, enabling finance leaders to spend less time searching for capital and more time deploying it strategically.

Here are five critical deal stages where automation is giving finance chiefs their time back:

1. Preliminary Underwriting & Capacity Sizing

Before engaging lenders, CFOs need precise insights into their borrowing capacity—a task traditionally mired in manual analysis. The cost is significant: Research from Gartner highlights that CFOs face increasing pressure to balance strategic leadership with operational demands, often spending significant portions of their time on tasks that could benefit from automation. Consulting giant Deloitte’s Signal Survey reports 60% of finance leaders’ hours go to operational duties rather than strategic initiatives.

Digital platforms like CAPX are changing this equation. By analyzing financials against standard lending metrics, CAPX quickly determines whether a company qualifies for a $20 million senior facility or a $50 million unitranche structure. This automation shifts CFOs’ focus from time-intensive analysis to evaluating real options, enabling faster and more strategic decisions.

2. Lender Sourcing & Vetting

With private credit’s explosive growth, the universe of potential lenders has expanded dramatically, far beyond what personal networks or traditional search methods can uncover. CAPX addresses this complexity with advanced filtering—matching borrowers to lenders based on deal size, industry focus, credit quality, and specific requirements like risk thresholds and sector specialization.

By combining vetted lender networks with data-driven algorithms, CAPX transforms what was once a weeks-long process into a streamlined workflow. It ensures CFOs can engage the right lenders efficiently while maintaining the human relationships critical to closing deals.

3. Pitching the Deal with Precision

Once borrowing capacity is established, presenting a uniform and effective credit thesis becomes the next critical step. This involves crafting a pitch that highlights the deal’s strengths and aligns with lenders’ risk tolerances, structural preferences, and sector focus. CAPX centralizes financial data and streamlines this process, ensuring consistency and clarity in borrower presentations.

By automating repetitive tasks, CAPX helps CFOs pitch with confidence and focus on strategy. This doesn’t just save time—it strengthens credibility with lenders, increasing the likelihood of securing favorable terms.

4. Eliminating Repetition with Smart Tools

Due diligence often creates bottlenecks, with repetitive questions and redundant tasks slowing progress. CAPX eliminates this friction through built-in tools like its Q&A mechanism, which centralizes and automates responses to lender queries. This ensures lenders quickly access the information they need without requiring multiple calls or duplicative conversations.

While datarooms are widely available, CAPX goes further by integrating data access with tools designed to reduce redundancy. This allows lenders to review materials, request clarifications, and make decisions faster—enabling CFOs to move deals forward without delays.

5. Term Sheets and Quick Evaluation

Once lenders are engaged, the ability to efficiently gather, compare, and evaluate term sheets becomes critical. CAPX centralizes submissions and presents term sheets in a side-by-side format, highlighting key variables like interest rates, fees, amortization schedules, and covenant requirements. This enables CFOs to quickly spot competitive offers while avoiding pitfalls like hidden fees or aggressive clauses.

A cohesive credit thesis enhances this stage by ensuring lenders fully understand the deal’s structure and value. CAPX simplifies borrower presentations, aligns lender preferences, and minimizes inconsistencies—positioning CFOs to negotiate effectively and secure the best possible terms.

The Bottom Line

While certain structures and covenants are standard across specific types of credit, the real difference lies in lenders’ varying risk appetites. These differences result in lenders offering more or less capital for the same credit profile or imposing varying levels of covenant flexibility. CAPX bridges this complexity by matching borrowers with lenders whose criteria align with their deal, ensuring CFOs can secure optimal terms efficiently.

The evolution of middle-market lending has created both opportunity and complexity. While the market offers more funding options than ever, evaluating dozens of lenders—each with unique terms and covenant structures—can consume weeks of valuable time. Automation platforms like CAPX are changing this equation, transforming labor-intensive processes into streamlined workflows. For CFOs, this shift from mechanics to strategy isn’t just about efficiency—it’s about securing the best terms in a market where every detail matters.

———–

Interested in learning more? Get in touch with the CAPX team to talk through your business capital needs, and where CAPX can help. 

The post Efficiency Unlocked: Five Digital Tools Redefining CFO Dealmaking appeared first on CAPX.

Before you start the hunt for your next loan, take a look at your approach and the ways it’s costing you time. Then, know that there’s a better way. 

1. Relying on relationships for term sheets

Does this sound familiar to you? You reach out to the banks you’ve worked with previously when you’re looking for your next loan. The banker asks you questions, prepares a pitch and a presentation. They seem enthusiastic and even confident that you’ll get the loan. As a result, you leave the meeting certain that the money is yours.

Then reality sets in. The bank’s underwriting team reviews the details and says, no way. There’s no deal. You’ve just lost time pitching a mission-critical deal to the wrong lender. 

There are faster ways to find a good lender match. With CAPX, your talks with the lender don’t start until they show you the term sheet. This removes the biggest inefficiency of the conventional lending process, giving you greater confidence that the deal will go through. 

2. Dialing for dollars

It’s not just the time that goes into building relationships with lenders that can set your company back. Using manual processes, especially in an age of automation, burns up precious time.  Without CAPX, you have no choice but to pick up the phone and reach out to banks and lenders one by one. 

CAPX has built-in tools that increase efficiency, creating credit memos and communicating your company’s needs and wants with multiple lenders. Our communication tools put you in contact with lenders and help you monitor the entire deal process.

3. Repeating the same steps

Running introductory calls, drafting written responses, and getting on more calls (all before knowing whether a term sheet is in the cards) uses a lot of your time—and gets repetitive. 

CAPX boosts efficiency (and cuts down on repetition) for you with a question-and-answer (Q&A) interface for lenders and borrowers: lenders can submit questions for borrowers to answer just once to share with all, in addition to allowing borrowers to proactively develop Q&As to preempt certain questions they are expecting. 

4. Not viewing risk the right way

Who’s in control of your company’s risk narrative? If you are not the one to manage the risk perception of your deal, your relationship lender will—which can result in a term sheet that looks quite different than what you expected (if you get a term sheet at all). 

CAPX can help you take control of your risk narrative and position your deal to lenders who are likely to bite. We work with you to develop a credit perspective that saves your time and delivers capital as efficiently as possible. 

Stop losing precious time chasing dead-end lenders. See how CAPX’s data-driven, end-to-end marketplace can help you quickly obtain the capital you need. 

The post 4 ways you’re wasting precious time chasing lenders for your deal appeared first on CAPX.

So, what’s a C-suite exec or finance professional to do? Make sure you’re tapping the whole market, not boxing yourself into just one side or the other. 

Below, we outline how to break down that capital raise—and how to secure it at better rates and more efficiently, to boot.  

1. Looking at a debt raise? Tap the non-bank private market

If traditional banks aren’t biting on your debt raise, it might be because your numbers are pristine for your stage and industry—but not for their overarching risk profile. 

Software/SaaS companies are a case in point: banks looking for the ‘right’ deal are looking for double-digit ARR growth rates, 85% gross margins, and retention rates in the upper 90%+. 

…Which isn’t realistic for most SaaS companies (VC-backed AI companies are our exception). 

Now consider this: the private lending market has grown considerably, and will continue to do so. In five years, the global private debt market is expected to reach a value of $3.5 trillion in AUM. 

So the market is certainly there. But private lenders can be hard to reach and are inundated as it is. 

How do you match your company’s niche, pitch, and capital needs to the right lender? Find a platform or service that will match your capital-raising needs with your unique profile. Sure, there are debt consultants. But why spend the money and time when there are platforms like CAPX that connect mid-market companies to private lenders directly, and help with terms and pricing, at lower rates. Think of this almost like a dating platform, but for corporate debt. 

2. Reach a broader base of traditional (bank) lenders

The more choice you have when obtaining debt capital, the better for your company. That means that going past your tried-and-true book of contacts and reaching the national market of lenders (really large banks you know and large banks you don’t know) may be ideal for your case. 

Again, utilizing a platform or service that can help you game out which type of lender, where, and who, will help you get to someone who specializes in your sector or sees opportunity in your pitch—even if they are based in another region. 

The bonus? That broader reach can ultimately lower your overall cost of capital and improve your negotiating position. 

Think of it this way: You’ll be in a better place to negotiate a deal that works for your company with multiple term sheets in hand rather than just one or two.

3. Streamline the lending process

And then there’s the logistics of it all: how efficient can you really be if you are going out and pitching lender after lender? 

Platforms like CAPX can make the process much more efficient: with a single click, you can connect to multiple lenders and receive term sheets within a few days. 

You’ll need to invest a little time up front answering questions we know you’ll get down the road (but hey—you just benefited from our deep expertise), but after that, the process is streamlined, secure, and confidential.

Tapping into the national market, connecting to private lenders and expanding your options all work together to reduce your execution risk and make it more likely that the deal will close. If one lender doesn’t work out, you’ll have others to fall back on.

CAPX increases your capital options and the probability of a successful execution. Get in touch today to learn more about how we can help your company meet its capital needs.

The post Local bank not biting? Here’s how your middle-market company can boost its odds of securing capital. appeared first on CAPX.

Financial Times: Bankers wary despite jump in corporate fundraising.

LCD: A record $727 billion in debt was issued in the syndicated debt markets through Jun’24.

Yet, a senior banker at one of the largest banks told me that 1H’24 has been the slowest in the last 30 years as per their internal analysis.

So, what is really going on in the capital markets and how can it impact you?

The real deal(s)

The LCD report is correct, the debt markets saw a massive uptick in volume, with two caveats:

• Almost 50% of loan volume was related to repricing, 30% related to refinancing and extensions and less than 20% related to new transactions. In fact, the new transaction related volume is less than half of what we saw in 2H ’21.
• LCD reports syndicated deals – typically $100MM+ deals with publicly available information. This data is not that relevant for most middle to lower middle market bilateral deals, which are almost always private.

We talk to lenders everyday for deals launched on CAPX. Here’s the real market update that matters to you.

Direct lenders have raised capital a while back but they have not been able to deploy it.

Supply of capital

Syndicated loan markets are clearly affected by the retail investor and institutional demand for securities earning higher rates than treasuries.

For the classic middle market, the dynamic is a bit different.

• Direct lenders have raised capital a while back but they have not been able to deploy it over the last 18 months (soon, 24 months) due to the lack of new M&A deals. So, direct lenders are seriously motivated to put money to work.
• Some direct lenders have faced challenges raising new funds, resulting in lower check sizes for new deals or even scaled back commitments right before closing a deal.
• Banks also have capital to deploy, but they have to strike a balance between higher capital costs due to higher interest paid on deposits and credit teams reluctant to do any deal that is not pristine.

Risk Appetite

Cautious is the right word to describe the credit environment.

Lenders do want to do deals – they have to deploy a mountain of capital – but they also have deals in their portfolios that have deteriorated over the last 18 months. This is true for banks and direct lenders.

• Lenders are focusing on high quality deals, i.e. companies with solid PE backing or solid financial track record. Quality deals can readily obtain aggressive structure and cheapest deal economics seen over the last few years.
• Deals with a story or uncertain equity commitment require broad market outreach to find a lender, unless they have sufficient assets to pursue an asset backed structure.
• Troubled deals in portfolio can color lender reactions to even quality deals – broad outreach is the only way to ensure successful execution.
• Combination of portfolio and fund raising issues have reduced check sizes for many banks and non-bank lenders. Even some small deals may need more than one lender to get to the finish line, which means multiple sets of bankers, underwriters, credit committees, lawyers and processes.Lenders are quite measured when it comes to deal structures.

Lenders are quite measured when it comes to deal structures.

Deal Structures

Despite the pressure to put capital to work, lenders are quite measured when it comes to deal structures. They compete for good deals with low pricing and accommodative documentation vs. high LTV, leverage or advance rates.

Leveraged / Cash Flow Deals

• For a performing credit with double digit EBITDA and solid PE backing, direct lenders can provide debt financing up to 70% of EV.
• For independent sponsors, 60% of EV is the most likely preference with some lenders insisting on 50% equity in every independent sponsor deal.
• For middle market corporates, if the transaction doesn’t involve new cash equity, lenders would want to stay below 60% of implied equity value.
• In terms of leverage, banks would want to stay well under 3.0x senior leverage and no more than 3.5x – 4.0x total leverage.
• While direct lenders are more flexible for a deal they really want to do, i.e. large sponsor, double digit EBITDA company, stable cash flows, etc., their leverage limits would be typically a turn higher than banks.
• Overall, the farther away a deal is from the ideal large company deal backed by a PE firm, the higher the required equity contribution and lower the leverage.

SaaS / ARR / Software Deals

• Tech slowdown has refocused credit teams at various lenders on their portfolios. The result is a more conservative outlook, smaller checks and enhanced focus on growth and mission critical nature of the borrower.
• In addition to PE backing, ideal stats for credit worthy SaaS companies are: (a) double digit YoY ARR growth, (b) 85%+ gross margins, (c) 90%+ gross ARR retention, and (d) 100%+ net ARR retention.
• A small but growing group of banks lend to enterprise SaaS firms through ARR underwriting methodology. Many of them will entertain only PE backed companies with funded debt under 1.0x ARR and most require a toggle to a leverage covenant within 2-3 years of closing.
• Direct lenders can lend up to 1.5x ARR, with exceptions to go up to 2.0x for a fast growing company with an entrenched market position and a meaningful investment from a PE firm.
• While the software lending is available to companies that do not fit the ideal profile, the number of available lenders drops quickly for companies without sponsor backing, lower growth rates and lower SaaS stats.

Asset Backed Deals

• Banks might be open to lending against unconventional collateral and reducing reporting burden, but advance rates are still remaining within the historic range.
• Direct lenders focused on ABL structures may offer higher advance rates, but for most companies, the difference between banks and direct lenders might not be too large.
• Direct lenders end up winning ABL deals when very few banks want to do the deal. If a bank likes an ABL deal, they can always outcompete a direct lender.

A few will go after story credits, for a price.

Pricing

Lenders need to deploy capital, if they can find the right deals. In this slow market, good deals are hard to come by. When they do, aggressive lender competition ensues, benefiting borrowers.

But, all deals are not the same. The all or nothing theme prevails in today’s market where all lenders want to do good deals while a few will go after story credits, for a price.

Just to be clear, we know from recent experience that there is a lender out there for pretty much any credit. However, the increase in economics from the ‘ideal’ credit to ‘less than ideal’ can be quite steep.

• Sponsor backed double digit EBITDA companies easily see SOFR + 5.50% pricing from direct lenders for leveraged deals. Increase the EBITDA and PE firm AUM, and you will see deals priced under SOFR + 5.00, pretty much in competition with the syndicated loan market.
• Less than pristine credits in the lower middle market should expect pricing above SOFR + 6.00%. As the borrower EBITDA moves towards $10MM or less, pricing is going to increase towards SOFR + 7.00%, and higher.
• If banks like a cash flow deal, their pricing floor would be around SOFR + 2.00%. Most wouldn’t price cash flow deals higher than SOFR + 4.50% – the deal would be too risky at that point for credit committee approval.
• Enterprise SaaS or ARR deals have similar pricing structure as leveraged deals. However, the pricing would climb a bit faster for story credits. As borrowers approach venture lenders for smaller deals, expect total interest to be in the mid-teens range, accompanied by exit fees and meaningful prepayment or call premiums.
• If you want cheap money, ABL is the structure to pursue. We have heard SOFR + 1.50% from banks as the new low, which is not that far above the all time lows. Most banks would still prefer to be in SOFR + 1.75% – 2.25% range. If you have to pay much more for a bank ABL, non-bank ABL lenders should be considered, who might be able to provide higher advance on collateral at SOFR + 4.50% and higher.

SOFR Floors and Call Premiums

SOFR will go back down toward 0.25% someday when the FED lowers rates. But, lenders don’t want SOFR to go much below 2.00%, which is the typical SOFR floor request. We have seen SOFR floors of 3.00% for story deals.

While this is an important yield enhancer for lenders, practically speaking, SOFR floors would have limited impact on debt service costs for borrowers, even if rates start declining in short order, as most loans are refinanced or repriced within 3 years.

Borrowers thinking about refinancing within a couple of years should think about the call premiums or pre-payment penalties. Most lower middle-market deals open with prepayment prohibition during the first year, followed by 2% call premium in year 2 and 1% in year 3. We have also seen 2% call premium in the first year and 1% in year 2 for better credits.

Conclusion

Lenders are eager to lend capital, but they are also seeing a lot of deals that their credit teams wouldn’t approve. Most lenders we know are really focusing on deals they can close, as there is no real consensus on how the rest of 2024 will turn out for the deal markets.

For under $50MM middle-market deals and larger story credits, expect a much longer deal process as lenders will take their time to provide feedback. And then again, you might have to approach many lenders to find a competitive and reliable solution.

If you have that ideal deal that all lenders want, congratulations, you get to close fast and cheap!

The post Debt market trends for sub $100MM deals appeared first on CAPX.

Key Insights

Lenders want to lend, if you have a deal that fits their ideal and tight credit box
You might have to wait to get feedback, even negative feedback
Multi-level marketing
Yes, it can take 2 months to close easily
The upshot
How can CAPX help?

Lenders want to lend, if you have a perfect deal that fits their ideal and tight credit box

There is no negotiating with the credit teams anymore, their decisions are binary and they are sticking with them. Lenders at every step of the credit spectrum want to do deals that fit their ideal risk/return profile. Which means, most credit guys turn down deals that they perceive to be outside the tightened credit box, never mind the potential higher returns. This applies to banks AND a majority of non-bank lenders. What happens when the lender you approach finds a little blemish on your credit story?

You might have to wait to get feedback, even negative feedback

A lender we spoke with confessed that a lot of their time was spent dealing with portfolio deals gone sideways. Plus, with credit police ready to say no to anything they show, a hint of imperfection earns a new deal “bottom of the pile” status, instantly. 18 months ago, deals launched on CAPX used to get multiple term sheets between days 3-5 after launch. Now we are getting one at the end of 5 days. Lenders are super focused on executing their ideal deals, lest the credit box tighten again – bird in hand, etc.

Can you get better terms, higher liquidity and lower interest rates for your company?

We can help you think through your options. Click here.

Multi-level marketing

Not the AmWay kind, we are referring to marketing to multiple lenders in multiple risk / return layers, simultaneously. You want to do this to quickly find lenders that can do the deal, and to have a back up plan, just in case the chosen one doesn’t close. We have never experienced predictability to close so low, ever. Even if a lender issues a term sheet, a lot can happen before the wire hits your bank account – their fund may run out of capital (or couldn’t get to that first close on the new fund), credit doesn’t like something they saw, another portfolio deal in a similar industry defaulted or the underwriter wanted to protest the end of remote work – we have seen all of these scenarios in last 18 months (except for the one about remote work, but we suspect that happened too!).

Yes, it can take 2 months to close, easily!

When our founder worked on the bankruptcy financing deal for Delta Airlines, it went from TS to commitment and fully negotiated credit docs in under a week, and they were on the hook for the full amount! Not sure even such high profile and lucrative deals can move so swiftly in today’s market. So, build buffers in your process – buffers to get to multiple lenders, get response from them and to close the deal. And, most importantly, buffers in case a lender backs out of deal at the last minute due to changes from their credit committee. You may wonder, is it really this bad?

What type of lenders are right for you?

Get a market read from our CEO, Rocky Gor. Click here.

The upshot

No, it is not dire. If you can simultaneously get to multiple lenders and find the ones that like the risk / return mix for your deal, you will most likely get the cheapest rate offered in the last 3 years. Yes, lenders are hungry to book deals that fit their tight credit box. The trick is to find that lender, without having to spend months talking to half the market.

Have you thought through your pitch for lenders?

We can help you prepare for an efficient outcome. Click here.

How can CAPX help?

CAPX is a secure, web-based corporate finance marketplace that matches middle market companies seeking more than $5MM with relevant lenders nationwide, and uses advanced algorithms to streamline workflows and accelerate deal execution. With CAPX, middle market borrowers can:

• Review and compare multiple credible structures to obtain the capital you need without having to consult an expert
• Access debt capacity under any capital structure scenario and identify the number of lenders available to provide capital, irrespective of credit quality
• Find matching lenders – both banks and alternative lenders – from across the country without networking or meetings
• Use our online tools to craft a compelling, lender-ready credit pitch once and instantly distribute to multiple lenders of your choice
• Obtain competitive rates and terms in days without repetitive calls and meetings

CAPX is designed to be a self-serve platform with no direct cost to borrowers, since  CAPX is compensated by lenders when deals close. Optional CAPX Assist services are available for a fee to help borrowers structure and launch deals, obtain term sheets, as well as negotiate and close deals with lenders, if desired.

The post Behind the Curtain in Today’s Debt Markets appeared first on CAPX.