One Degree Capital Blog

News, Tips and Information for Business Owners

Written by One Degree Capital

There’s an old saying: "You can have something fast, cheap or easy - pick two." Read more to learn how we helped our client find a way to achieve all three.

 

A Restauranteur's Vision

When Kyle opened his first restaurant several years ago, it was all part of a master plan. Kyle’s dream was to have five successful restaurants around the DC Metro area. To do that he knew two things: a) he needed a solid plan and b) slow and steady wins the race.

After opening his first two locations and giving time for them to become established, Kyle was ready to open his third. Having worked with One Degree on the prior projects, he again turned to our Banking and Capital Advisory Service for help.

 

Working With One Degree

The strength of Kyle’s existing locations and his personal finances gave him a lot of options. In our analysis we identified that Kyle’s project would easily attract bank, nonbank and investor solutions.

The decision on which structure to use came down to the amount of freedom Kyle wanted to have going forward. Investors would want a certain amount of ownership and control. While bank financing options have the most favorable terms, they also have the most restrictive covenants. Bank financing would also seek to secure their loan by having Kyle pledge all his business and personal assets. This did not fit into Kyle’s expansion plans.

After weighing all options, Kyle decided it was worth paying a bit more to have the flexibility offered by nonbank financing. With that decision made, we found Kyle a financing source that offered the best structure at the best price.

 

The Capital Trifecta

Bank financing is often the least expensive payment and interest rate option and comparing a loan for Kyle’s whole project was no exception.

However, we successfully lowered the Total Cost of Capital by breaking up the project. Rather than seek one large loan, we structured the financing in phases to match the project needs. This type of ‘loan laddering’ saved Kyle thousands in interest over the life of his project, even when compared to bank financing.

By careful planning, we worked with Kyle and found a way to get the financing he needed that was “fast, cheap AND easy” - forever debunking that old saying!

 

“One Degree really thinks outside the box and that is exactly what my project needed. It would have been easy for me to go get a bank loan for my project. But I knew I wanted something that gave me more flexibility. One Degree found the perfect solution. I look forward to working with them on my next expansion.” - Kyle

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