Investments are structured to balance the funding needs and capital servicing ability of the company with the return expectations of our investors. Typical terms and conditions of debt and equity investments are as follows:

Subordinated Debt

Minimum of $5.0 million, although exceptions for investments promising future lending opportunities are considered.

Maximum of $40 million, however, loans of even larger amounts are available in conjunction with our limited partners.

Current interest rate typically of 10–14%.

5–7 year stated maturity.

Investments can be structured with a single principal payment due at maturity or with amortization in the final 2–3 years of the loan.

Security generally includes a second lien on the company’s assets and/or stock and key-man life insurance on critical management team members.

A deferred return component usually in the form of an equity participation to generate an all-in return on capital commensurate with the unique risks of the investment and the expectations for similar investments in the marketplace.

Preferred/Common Stock

Minimum of $2.0 million.

Maximum of $20.0 million.

Current or PIK dividend rate of 6–10% on preferred stock, common stock generally does not carry a dividend.

Redemption right on preferred stock after 5–8 years via a put option, common stock investments typically do not have mandatory redemption rights.

Minority equity holder rights such as dilution protection, board observation/voting privileges and limited consultation and consent rights.