Venture debt is a specialized form of financing designed to complement venture capital by providing growth-stage companies with non-dilutive capital. Unlike traditional bank loans that rely heavily on cash flow or hard assets, venture debt underwrites risk based on the quality of a company’s investors, technology, and growth trajectory. It typically comes in the form of term loans or equipment financing and is extended to VC-backed businesses that may not yet have the profitability or collateral to access conventional credit markets. By layering debt alongside equity raises, venture debt gives founders additional runway to hit milestones, extend cash between fundraising rounds, or fund acquisitions, while minimizing dilution. Over the last two decades, venture debt has become an institutionalized asset class that sits at the intersection of venture capital and private credit. Firms like SVB, Hercules, WTI, and TriplePoint helped establish its playbook: disciplined underwriting of high-growth companies, creative structuring with warrants and covenants, and strong relationships with the venture ecosystem. For founders, it represents a strategic tool rather than a replacement for equity.

For investors, it offers attractive, risk-adjusted returns that balance yield with downside protection.

At its best, venture debt aligns incentives across entrepreneurs, VCs, and lenders to accelerate innovation while prudently managing risk.

Asset-Based Lending is a senior secured financing product that provides companies with liquidity based on the value of their working assets, most commonly accounts receivable and inventory. Unlike cash flow lending, which emphasizes EBITDA and enterprise value, ABL is formulaic and governed by borrowing bases tied to the liquidation value of collateral. Advances are typically structured as a revolving line of credit or term loan with disciplined monitoring of receivables, inventory, and other assets. This approach enables borrowers—often seasonal, capital-intensive, or in transition—to access reliable funding even when cash flow volatility or leverage levels might otherwise restrict them in the traditional credit markets.

As an asset class, ABL has matured into a cornerstone of middle-market and lower middle-market financing, balancing credit protection with borrower flexibility. Leading platforms such as Ares, MidCap, Siena, and Encina have built expertise in structuring facilities that scale with a company’s growth, adapt through cycles, and provide downside protection via collateral coverage. For lenders, the appeal lies in the senior secured position and strong recovery profile, while for companies and sponsors, ABL offers a dependable source of working capital and acquisition capacity. At its best, the product is a partnership—pairing rigorous underwriting and field exams with the ability to unlock liquidity, stabilize operations, and drive growth.

Mezzanine financing is a hybrid form of capital that bridges the gap between senior debt and equity, offering companies flexible growth capital while preserving ownership. Structurally, it is typically subordinated to senior secured lenders but senior to common equity, often combining a contractual cash yield with equity-linked upside through warrants or conversion features. In the venture ecosystem, mezzanine debt can extend runway, fund late-stage expansion, or provide acquisition financing when companies are scaling beyond traditional venture debt parameters but are not yet ready for public or strategic exit. It plays a complementary role by reducing dilution for founders and investors while supplying capital that is more patient and growth-oriented than senior credit.

In the cash flow lending and private equity–backed middle market, mezzanine capital functions as a tailored solution to finance buyouts, recapitalizations, and transformative growth. Sponsors rely on mezzanine to fill the capital stack between senior leveraged loans and equity checks, allowing transactions to proceed without over-leveraging the senior facility or over-diluting equity investors. For lenders, the asset class offers attractive risk-adjusted returns through a blend of current pay, PIK interest, and equity participation, balanced against structural protections like covenants and intercreditor agreements. Over time, mezzanine has become a strategic tool across both venture and cash-flow based markets—aligning entrepreneurs, sponsors, and investors in shared value creation while taking a calculated position in the capital structure.

Special Situations Growth Capital sits at the intersection of private credit, distressed investing, and growth financing, targeting companies that fall outside the neat boxes of traditional asset-based lending or cash flow lending. These are situations where a lender provides capital to a business that may not have sufficient collateral coverage or predictable cash flows to support conventional credit, yet demonstrates meaningful enterprise value potential, often through strong growth, intellectual property, or market positioning. The investor is underwriting to both downside protection and the probability that the company’s equity value will grow, effectively taking some enterprise value risk alongside the sponsor or management team. This form of capital is often deployed in transitional moments—bridge financings, rescue situations, post-restructuring growth phases, or periods where the company needs time to achieve scale but cannot yet access cheaper institutional debt. Historically, hedge funds, opportunistic credit platforms, and later-stage venture debt funds have been active players in this segment, drawn by the ability to structure bespoke instruments that combine contractual yield with equity-like upside. Structures often blend senior secured notes with equity kickers, convertibles, or PIK components, designed to balance risk against potential return. Unique characteristics of this market include a high tolerance for complexity, shorter investment horizons compared to traditional growth equity, and a reliance on deep underwriting of both the business model and sponsor support. Special Situations Growth Capital thrives in environments where conventional financing sources retrench, creating white space for flexible capital providers to bridge the gap between pure debt and pure equity—while pricing risk at a premium.

Revenue-Based Financing is an alternative form of growth capital that aligns repayment with a company’s actual performance, rather than fixed amortization schedules or collateral coverage. Instead of lending against assets or EBITDA, RBF structures advance capital to high-growth businesses in exchange for a percentage of future monthly revenues until a predetermined return cap is achieved. This makes it particularly well-suited for companies with recurring revenue models, strong gross margins, and predictable customer retention—businesses that may not fit neatly into traditional ABL or venture debt frameworks.

Because payments flex with revenue, RBF naturally accommodates seasonality and volatility, reducing the pressure of fixed debt service and providing a more founder-friendly alternative to equity dilution.

Having matured over the past decade, RBF has carved out a unique niche at the intersection of private credit and growth equity. Firms like Decathlon Capital have proven that it can serve companies in the “in-between” zone—too early for large senior credit facilities, but not looking to dilute further through institutional equity rounds. The model works best when underwriting emphasizes unit economics, customer concentration, and revenue predictability, rather than balance sheet assets. For lenders and investors, RBF offers compelling yields with self-liquidating structures, while for founders, it creates a capital solution that scales with success.

The unique insight is that RBF is less about leverage and more about alignment—capital that grows in step with revenue, making it a powerful tool for companies navigating non-linear growth trajectories.

Equipment leasing is a specialized financing solution that allows companies to acquire mission-critical assets without the upfront capital burden of an outright purchase. Instead of drawing heavily on cash reserves or raising additional equity, businesses can lease equipment—from manufacturing lines and transportation fleets to data centers and life sciences hardware—through structures that spread costs over the asset’s useful life. Depending on the structure, leases can be operating or capital in nature, offering flexibility around ownership, tax treatment, and residual risk. For high-growth or capital-intensive companies, equipment leasing preserves liquidity, aligns costs with revenue generation, and supports scaling without over-leveraging the balance sheet.

As an asset class, equipment finance has matured into a key component of private credit and structured lending, balancing downside protection with growth enablement. Firms like Trinity Capital and Stonebriar specialize in underwriting to the asset’s residual value, the borrower’s growth trajectory, and the secondary market for the equipment itself. This approach makes the product viable for both venture-backed innovators and middle-market operators who need to expand capacity quickly. For lenders, the appeal lies in asset-backed risk management and predictable cash flows; for companies, it offers access to otherwise cost-prohibitive technology

and infrastructure. At its best, equipment leasing is a partnership—unlocking capital efficiency while providing lenders with secured exposure to tangible, income-generating assets.

Trade receivables securitization is a structured finance technique that transforms a company’s accounts receivable into a source of low-cost, scalable funding. Rather than borrowing against receivables in a traditional ABL facility, securitizations involve selling receivables into a bankruptcy-remote special purpose vehicle (SPV), which in turn issues notes to investors or draws on committed bank conduits. The SPV structure isolates credit risk and provides investors with security in the underlying receivables pool, allowing issuers to access investment-grade funding levels at attractive pricing. For corporates, this unlocks working capital, diversifies funding sources, and provides incremental liquidity beyond what standard revolving credit facilities might offer.

What makes the segment unique is the intersection of corporate treasury strategy, structured credit, and operational discipline. Securitizations require robust receivables performance data, strong servicing infrastructure, and careful monitoring of eligibility, dilution, and concentration risk. Unlike formulaic borrowing base lending, securitizations are more dynamic, tailored to the credit profile of the receivables obligors rather than the originating company. Banks like PNC and other large institutions have built deep expertise in structuring and administering these programs, helping clients optimize balance sheets and enhance liquidity. At its best, receivables securitization is both a funding tool and a capital markets strategy—linking trade finance with institutional investor appetite while creating efficient, scalable access to working capital.

Asset-Based Finance (ABF) is a specialized segment of credit investing that provides financing secured by identifiable pools of financial or real assets. Unlike traditional corporate lending, which primarily relies on cash flow coverage and enterprise value, ABF underwrites directly to the collateral—such as consumer receivables, credit card portfolios, auto loans (prime and subprime), equipment leases, or short-duration real estate loans. The fundamental driver is the predictability of asset cash flows and the quality of the collateral, which enables lenders and investors to structure financings that can withstand stresses in the borrower’s corporate performance. By financing the assets rather than the company, investors can create tailored facilities that support specialty finance platforms, non-bank lenders, or originators, often through warehouse lines, term securitizations, or structured credit solutions. Over the last two decades, Asset-Based Finance has become an essential strategy for firms like Angelo Gordon, Atalaya, Medalist, and Fortress that thrive at the intersection of private credit and structured products. The segment offers a differentiated risk/return profile by combining recurring cash flows with collateral-backed downside protection, making it attractive in both benign and volatile credit markets. Key value creation lies in the ability to diligence the underlying collateral pools, structure facilities with appropriate advance rates, triggers, and covenants, and align interests with sponsors and originators. In practice, ABF has proven adaptable—supporting growth for fintech lenders, funding subprime credit in underserved markets, and providing liquidity in asset classes that traditional banks have retrenched from post-crisis. For experienced practitioners, the space offers a unique blend of credit underwriting, structuring expertise, and opportunistic capital deployment across market cycles.

Factoring is one of the oldest forms of commercial finance, designed to provide immediate liquidity against a company’s accounts receivable. In its most basic form, a factor purchases invoices at a discount, advancing cash to the business while assuming responsibility for collecting from the end customer. This structure helps companies smooth cash flow, shorten working capital cycles, and fund growth without taking on traditional term debt. Factoring is particularly common among businesses that sell on open terms to creditworthy counterparties but face delays in payment—such as staffing firms, apparel importers, and lower middle-market distributors. Because repayment is tied directly to invoice collections, underwriting focuses on the creditworthiness of the account debtors rather than the operating company itself, which makes factoring a solution for earlier-stage or underbanked businesses that may not qualify for conventional loans.

Over the years, factoring has evolved from a transactional, often expensive financing tool to a more institutionalized product offered by both bank-affiliated and independent finance companies. While smaller “mom and pop” factors still serve niche and local markets, the lower middle-market has seen more sophisticated platforms emerge, offering flexible structures, non-recourse options, and integrated receivables management services. Firms like SVB historically encountered factoring as part of broader asset-based lending solutions, especially for clients with concentrated customer bases or rapid growth. Although sometimes perceived as a last-resort financing method due to cost, factoring continues to play a vital role in the capital stack by providing liquidity where speed, collateral focus, and debtor strength outweigh the borrower’s balance sheet or profitability profile.

Non-recourse commercial real estate (CRE) term financing is a core tool for property owners seeking long-term, fixed-rate debt that is secured solely by the underlying asset, with no recourse to the borrower’s broader balance sheet. In this structure, repayment is tied directly to the performance of the property—typically stabilized office, multifamily, retail, or industrial assets—rather than the sponsor’s creditworthiness. The underwriting focus is on property-level cash flows, tenant strength, lease terms, and collateral value. Non-recourse loans are most often structured with fixed maturities, amortization schedules, and covenants that ensure the property generates sufficient net operating income to service debt. Because the lender’s only recourse is the property, these financings are attractive to sponsors who want to ringfence risk while locking in predictable, long-term capital. Borrowers can access non-recourse CRE term financing through several channels. Life insurance companies are prominent players, often offering competitively priced, lower-leverage fixed-rate loans on high-quality, stabilized assets for long-term hold investors. On the capital markets side, securitized mortgage-backed securities (CMBS or “conduit”) lenders pool loans into structured products, providing higher leverage and broader property-type coverage but typically with more rigid documentation. Beyond these, debt funds, pension-backed vehicles, and specialty finance platforms also provide non-recourse options, particularly for transitional assets or borrowers seeking flexibility outside the highly standardized CMBS market. Each path carries trade-offs in terms of leverage, pricing, structure, and execution certainty, but collectively they form a robust ecosystem of non-recourse financing alternatives for real estate sponsors.

Unitranche term loan financing has emerged as a mainstream private credit solution in the middle market, designed to simplify capital structures by blending senior and subordinated debt into a single facility. Instead of stacking multiple tranches of debt with different pricing and covenants, a unitranche loan provides one consolidated instrument, offering borrowers a streamlined structure with a single interest rate, one set of covenants, and one lender or lender group to manage. This approach appeals to sponsors and management teams seeking speed, certainty of execution, and reduced intercreditor complexity, particularly in leveraged buyouts, recapitalizations, and growth financings. From the borrower’s perspective, unitranche financing provides leverage levels comparable to a traditional senior plus mezzanine package, but with greater efficiency and execution flexibility.

Firms like H.I.G. Capital, Monroe Capital, Golub Capital, and other non-bank direct lending platforms have been leaders in deploying unitranche capital, often at higher leverage pointsor in niches where banks have retrenched. Behind the scenes, unitranche facilities may still employ a “first-out/last-out” structure, with different risk-return allocations among lending participants, but this complexity is hidden from the borrower. This product has become especially popular in private equity-backed transactions, where sponsors value the speed and certainty of a single lender solution, even at a pricing premium relative to traditional bank debt.

The rise of unitranche lending underscores the growing influence of private credit funds in middle market financing, offering tailored, flexible capital solutions that compete directly with the syndicated loan and high-yield bond markets.

Sponsor buyout financing is a cornerstone of the private credit ecosystem, providing lenders the opportunity to back private equity acquisitions with tailored debt structures. Traditionally, this segment has been rooted in cash flow lending, where facilities are underwritten to the company’s EBITDA and the predictability of free cash flow. Senior secured term loans, often paired with revolving credit lines, form the backbone of these financings, with leverage sized against recurring EBITDA and supported by the equity cushion a sponsor contributes. Lenders are attracted to these deals not only because of the consistent demand from private equity sponsors, but also because the sponsor’s operational expertise and capital support can enhance the credit profile of the borrower, reducing downside risk relative to non-sponsored transactions.

In recent years, the market has also evolved to support buyouts in software and technology sectors, where SaaS companies often lack traditional EBITDA but boast strong visibility into recurring revenues. Here, lenders have adapted by developing ARR-based financing structures, underwriting to the durability and growth of subscription revenue streams rather than conventional profitability metrics. This ARR lending has become particularly common in lower middle-market sponsor-backed SaaS buyouts, where equity sponsors and lenders share conviction in the stickiness of the revenue model. Direct lenders such as Golub Capital, Monroe Capital, Hercules Capital, and Tree Line Capital Partners have become adept at providing both cash flow and ARR-based structures, allowing them to support a broader range of sponsor strategies. Together, traditional EBITDA-based cash flow financing and newer ARR-focused lending underscore the adaptability of the sponsor buyout financing market and its central role in fueling private equity activity.

Net Asset Value (“NAV”) financing is a form of fund-level credit facility in which the borrowing base is secured by the value of a private equity or alternative investment fund’s underlying portfolio. Unlike subscription credit lines that are collateralized by uncalled LP commitments, NAV facilities rely on the mark-to-market value and cash flow profile of the fund’s investments to determine borrowing capacity. These structures are commonly used by mid- to late-life funds seeking liquidity for portfolio support, follow-on investments, GP-led secondary transactions, or distributions to LPs. The lender underwrites the portfolio diversification, asset quality, valuation methodology, and exit visibility to structure advances that are typically a percentage of NAV, often with advance rates ranging from 10% to 30%. Institutionally, NAV financing has become an important tool within the private credit ecosystem as sponsors seek flexible, non-dilutive capital solutions. From the lender’s perspective, underwriting requires a combination of credit, private equity, and portfolio analytics expertise, with risk mitigated through diversification tests, concentration limits, and periodic NAV reporting. Pricing tends to be higher than subscription lines but reflects the collateralized nature of the exposure versus unsecured fund-level leverage. As fundraising cycles lengthen and LP liquidity pressures persist, NAV financing is expected to remain a growth area, offering GPs an alternative source of capital while allowing investors to bridge liquidity needs without forcing premature asset sales.