Frequently Asked Questions: Business Funding & Debt Facilities

General Financing & Intermediary Services -

Q: Is Brent Funding Partners a direct lender? A: No, Brent Funding Partners acts as a dedicated capital intermediary. We do not provide direct funding, nor do we deal in Private Equity or corporate securities. Instead, we serve as your strategic partner, leveraging an elite nationwide network of specialized commercial lenders to source, structure, and secure the precise debt facilities your business requires.

Q: What are the advantages of working with a capital intermediary rather than going directly to a local bank? A: Commercial banks have rigid, narrow underwriting boxes and tightly managed cash-flow criteria. As an intermediary, Brent Funding Partners broadens your access. We analyze your unique financial profile and position your file directly in front of the specific lenders in our network whose current risk appetites match your financing needs—saving you valuable time and optimizing your capital structure.

Working Capital & Debt Facilities -

Q: What is a Business Term Loan? A: Provides a lump sum of capital upfront, which is repaid over a set period with a scheduled, predictable payment structure. It is an ideal facility for financing specific, long-term capital investments or major expansion projects where fixed costs are essential for your corporate budgeting.

Q: How does a Debt Refinance / Debt Consolidation facility help my balance sheet? A: Replaces legacy, high-cost, or overly restrictive liabilities with a modern, optimized credit facility. This allows a business to lower its overall cost of capital, roll multiple high-frequency payments into one structured liability, extend maturity walls, or modify rigid bank covenants that may be choking daily operational flexibility.

Q: What is Asset-Based Lending (ABL)? A: Flexible revolving line of credit or term loan secured directly by the liquid assets on your balance sheet, such as accounts receivable, inventory, or equipment. Rather than being constrained by historical cash-flow metrics, an ABL facility allows your borrowing capacity to scale dynamically alongside your real-time transactional velocity.

Q: What is Equipment Financing? A: Targeted asset loan or lease structure used explicitly to acquire business-essential machinery, vehicles, technology, or hardware. The equipment itself serves as the primary collateral for the loan, which typically allows for lower down payments and protects your company’s core liquid cash reserves.

Q: What is Mergers & Acquisitions (M&A) Financing? A: Consists of specialized debt structures designed to fund the acquisition of an existing business, franchise, or corporate competitor, or to facilitate a strategic merger. We help package these transactions to align with the post-close cash flow of the integrated enterprise, allowing you to scale while preserving your existing working capital.

Q: What is a Business Line of Credit? A: Revolving capital facility that gives your business on-demand access to a specific pool of funds. You only pay interest on the amount you actively draw, and as you repay the principal, that capital becomes available to use again, making it the ultimate tool for managing seasonal cash flow gaps or short-term operational expenses.

Q: What is Revenue-Based Financing? A: Funding structure where a business receives upfront capital in exchange for a fixed percentage of its ongoing future revenues. Payments scale dynamically—increasing during high-revenue months and decreasing during slower periods—making it highly accessible for growing firms that do not want to pledge hard collateral or dilute equity.

Q: What is Invoice Factoring? A: Specialized working capital solution where a business sells its outstanding B2B accounts receivable (unpaid customer invoices) to a financial institution at a slight discount. This eliminates the standard 30-to-90-day customer payment wait times, converting your trapped paper assets into immediate, predictable cash flow to fund daily operations.

Q: What is a Merchant Cash Advance (MCA)? A: Provides rapid, non-revolving liquidity based directly on your business's historical card processing volume or daily bank deposits. Repayments are structured as a fixed daily or weekly percentage automatically deducted from your commercial sales, offering speed and flexibility for businesses requiring immediate short-term capital.

Asset & Real Estate Finance -

Q: What are Real Estate Investment Loans? A: Debt facilities structured specifically for non-owner occupied commercial properties, multi-family units, or residential investor portfolios. These facilities include fix-and-flip financing, long-term rental cash-flow loans, and bridge debt, focused on the revenue-generating potential of the underlying property asset.

Seller-Financed Notes (Carry back Notes) -

Q: What is a Seller-Financed Note (or Carry back Note), and how does it apply to real estate and business sales? A: Private debt instrument created when the seller of an asset acts as the lender for the buyer. Instead of the buyer securing a traditional bank loan for the full purchase price, the seller "carries back" a portion of the equity as a structured loan, documented by a legally binding promissory note and secured by the underlying asset.

• In Real Estate: A real estate investor accepts a down payment from a buyer and carries a note for the remaining balance, secured by a mortgage or deed of trust on the property.

• In Business Acquisitions: A business owner sells their company, accepts a cash injection at closing, and carries back a promissory note for the remaining purchase price, typically secured by a UCC-1 lien on the corporate assets and a personal guarantee from the new buyer.

Q: Can a note holder sell their Seller-Financed Note to recapitalize? A: Yes. Holding a long-term note means your capital is locked up in monthly installments. If a real estate investor or former business owner needs immediate, liquid capital to fund a new project, seize a market opportunity, or execute a corporate turnaround, they have the option to sell that note to a secondary market note buyer. This liquidity strategy is known as recapitalization—converting a passive, long-term stream of income back into a lump sum of immediate cash.

Q: What is the process for selling a private Seller-Financed Note? A: The sale of a private promissory note moves through a structured due diligence process that typically takes between 15 to 35 days:

1. Submission and Quote Request: The note holder provides the core document stack: the original promissory note, the security agreement (mortgage, deed of trust, or UCC-1 filing), the buyer’s original down payment details, and the historical payment ledger.

2. Collateral Valuation: The note buyer conducts due diligence on the underlying asset to determine the real-time Loan-to-Value (LTV) ratio. For real estate, this involves a property appraisal; for a business note, it involves verifying the health of the commercial assets.

3. Credit and Underwriting Review: The note buyer reviews the credit profile of the payer (the individual or entity making the monthly payments) and evaluates the "seasoning"—the length of time the note has successfully performed without late payments.

4. The Discount Rate Offer: Note buyers purchase notes at a discount relative to the remaining principal balance. The stronger the payer's credit, the higher the down payment originally made, and the cleaner the third-party payment history, the smaller the discount will be.

5. Funding Options (Full vs. Partial): The note holder can choose a Full Sale to liquidate the entire remaining balance for a single lump sum, or a Partial Sale, where they sell only a specific number of upcoming monthly payments (e.g., the next 36 months of cash flow) to secure a smaller cash injection while retaining the right to collect the remaining balance of the note in the future.

Q: Can a private seller-financed note be sold at par value? A: In the secondary note market, selling a private promissory note at absolute par value (100% of its remaining principal balance) is extremely rare. Because private notes are inherently less liquid and carry higher default risks than institutional bank loans, secondary market note buyers require a financial discount to achieve their target yield and offset their risk exposure.

However, a note holder can minimize this discount and get as close to par value as possible if the note possesses elite underwriting characteristics, such as a substantial cash down payment (20% to 30%+), strong payer credit, extensive seasoning (12 to 24+ months of clean history), and a market-competitive interest rate. If a note holder refuses to accept a discount, a Partial Sale is their best strategic alternative to raise cash without sacrificing back-end principal value.

Please note: Discount rates can vary significantly by note type, geographic region, asset class, note maturity, the unique credit profile of the note payer, and the current macroeconomic interest rate environment.

Key Debt Underwriting Metrics Explained -

Q: What is the Debt Service Coverage Ratio (DSCR), and why do lenders care about it? A: DSCR is a foundational metric used by commercial lenders to measure a business’s ability to cover its required debt payments with its operational earnings. It calculates the safety margin between what your business earns and what it owes. Lenders look closely at this ratio because it demonstrates whether the business generates enough of a cash cushion to absorb unexpected revenue fluctuations without risking default.

Q: How is the Debt Service Coverage Ratio (DSCR) calculated? A: Lenders use a straightforward vertical division formula to determine this baseline metric, ensuring complete display accuracy across both desktop and mobile layouts:

Net Operating Income (NOI) ÷ Total Debt Service = DSCR

• Step 1: Determine Net Operating Income (NOI) Your total annual business revenue minus all normal operating expenses (excluding taxes, interest, depreciation, and amortization).

• Step 2: Determine Total Debt Service The total sum of all required principal and interest payments due on your business liabilities over a one-year period.

• The Underwriting Rule: A DSCR of 1.0x means your business breaks exactly even. Most conventional lenders look for a preferred minimum DSCR of 1.25x or higher, meaning the business generates $1.25 of net operating income for every $1.00 of required debt service.

Q: What is EBITDA? A: Earnings Before Interest, Taxes, Depreciation, and Amortization. It serves as a universal baseline for a business's operational profitability by stripping away the distorting effects of varying tax environments, localized accounting choices, and individual capital structures. In the debt markets, lenders utilize EBITDA as a reliable proxy for ongoing cash-flow capacity.

Q: How is EBITDA determined by commercial lenders? A: Lenders calculate EBITDA by taking your baseline net profit and adding back specific non-cash and capital structure expenses to maintain a standard layout:

Net Income + Interest + Taxes + Depreciation + Amortization = EBITDA

• [+] Net Income: The baseline net profit found at the bottom of your P&L statement.

• [+] Interest Expense: Added back to remove the individual cost of your current debt.

• [+] Tax Expense: Added back to eliminate localized, variable corporate tax burdens.

• [+] Depreciation: Added back to reverse the non-cash write-down of physical equipment.

• [+] Amortization: Added back to reverse the non-cash write-down of intangible assets.

Lenders will take this a step further to find Adjusted EBITDA (or Normalized EBITDA). This process allows to "add back" legitimate, non-recurring, or personal expenses run through the business that a new buyer or lender would not face, ongoing including owner compensation above, or below market rates, discretionary personal expenses run through the company, or one-time legal/extraordinary repair costs.

Next Steps

If your business is seeking to understand exactly which debt facility would best achieve your strategic objectives, please click below to take our comprehensive Capital Assessment.

Disclaimer:

Educational Point of View and Information Accuracy Notice The information provided on this page, including all frequently asked questions, debt facility explanations, underwriting metrics, and calculations (such as DSCR, EBITDA, and private note valuations), is intended solely for general informational, educational, and directional purposes. It represents a professional point of view and market framework regarding commercial debt structures and should not be interpreted as absolute underwriting mandates, binding financial advice, or a guaranteed commitment to secure funding.

Brent Funding Partners operates strictly as a capital intermediary and broker, not a direct commercial lender, asset manager, or securities dealer. Actual financing availability, interest rates, loan terms, and facility structures are determined exclusively by independent third-party lending institutions inside our network, subject to formal credit underwriting, due diligence, changing macroeconomic environments, and specific borrower risk profiles. Business owners and corporate operators are strongly encouraged to consult with their own legal, accounting, and tax professionals before entering into any corporate debt or financing obligations.