Most $1M+ operators walk into a capital conversation knowing one instrument. Sometimes two.

There are seven worth knowing before you have that conversation.

Ignorance in a capital conversation is expensive. Here is what the market actually offers at your revenue level.

1. Revenue-Based Financing

• *Repayment tied to monthly revenue, not a fixed schedule
• *No equity diluted and no collateral required
• *Best for businesses with strong recurring top-line and seasonal flexibility needs
• *Watch for total payback multiples that make the effective rate higher than it appears

2. Term Loans (Private Credit)

• *Fixed repayment over a defined period, structured outside traditional banking
• *Faster close than institutional debt and more flexibility on covenants
• *Best for operators with clear use of funds and predictable cash flow
• *Watch for prepayment penalties buried in the back of the agreement

3. Revolving Credit Facilities

• *Draw, repay, redraw
• *Priced on what you use, not what you have access to
• *Best for businesses with working capital gaps or inventory cycles
• *Watch for annual renewal risk if your financials shift mid-cycle

4. Real Estate-Backed Credit Lines

• *Operating companies with owned real estate can unlock credit against that asset
• *Often underused because operators do not think of their property as a capital lever
• *Best for businesses sitting on real estate equity they have never activated
• *Watch for LTV limits and cross-collateralization clauses

5. Unitranche Debt

• *A single blended facility that combines senior and subordinated debt
• *Simplifies the capital stack with one lender and one agreement
• *Best for operators who want speed and simplicity over optimized pricing
• *Watch for convenience that comes with a blended rate that is rarely the cheapest option

6. Mezzanine Financing

• *Sits between senior debt and equity in the capital stack
• *Higher cost, but does not require the collateral senior lenders demand
• *Best for businesses that have exhausted senior debt capacity but are not ready to dilute equity
• *Watch for equity kickers and warrants that give the lender upside in your business

7. Asset-Based Lending (ABL)

• *Credit structured against receivables, inventory, or equipment
• *The asset quality drives the facility size more than your credit profile
• *Best for product businesses, manufacturers, and distributors
• *Watch for borrowing base certificates and the administrative load that comes with them