Companies that need debt, not dilution.

An individual provider may recommend structure and credit terms, but final commitment authority is constrained by underwriting policy, risk limits, delegated authority, and credit approval governance.

authority

Negative or intermittent cash flow, limited collateral, unproven business models, and dependence on external financing can weaken repayment prospects.

concern

OCC cautions U.S. bank lenders that recurring revenue is credit-positive but is not equivalent to sustainable repayment capacity when cash flow, collateral, or net worth remains insufficient.

concern

Rapid changes in venture markets, valuations, and capital availability can alter the borrower's refinancing capacity and loan structure options.

concern

A venture borrower may lack mature operating history, positive free cash flow, or sufficient conventional collateral, limiting the evidence available for underwriting.

constraint

The provider must operate within legal requirements, institutional risk appetite, concentration limits, capital and liquidity capacity, and delegated approval authority.

constraint

British Business Bank guidance says early-stage venture-debt lenders focus on investors, recent equity rounds, current and forecast burn, committed follow-on capital, and demonstrated milestone delivery.

decision criterion

Credit evaluation should test historical performance against plan, projection reasonableness, cash burn and liquidity, business viability, investor support, and primary and secondary repayment sources.

decision criterion

For U.S. banks, OCC says venture-loan risk ratings should consider performance against plan, projection reasonableness, capacity to repay and de-lever, committed equity, market conditions, and sustainable repayment sources.

decision criterion

HSBC's provider guidance lists existing equity, additional-equity plans, debt-to-equity ratio, free cash flow, future valuation, liquidity, milestones, growth prospects, and burn-relative-to-revenue as lending criteria.

decision criterion

OCC explicitly says an uncommitted future equity raise is not a satisfactory or sustainable primary repayment source for a bank venture loan.

objection

OCC rejects implied guarantees from venture investors and requires legally binding commitments plus reliable performance and projection evidence before external funding can mitigate repayment risk.

trust concern

British Business Bank says high-burn companies are viewed as riskier venture-debt borrowers because they rely more heavily on external capital to sustain operations.

worry

OCC's 2025 U.S. bank guidance identifies venture-borrower risks including unproven products, insufficient liquidity or collateral, negative operating cash flow, reliance on external equity, and uncertain long-term viability.

worry

The retained regulatory, institutional, and lender sources use primary source of repayment or PSOR, runway, burn rate, remaining months liquidity or RML, covenant, performance to plan, downside scenario, committed equity, milestone, warrant, senior secured, covenant-lite, and risk appetite as operating terms.

terminology

OCC explains that lenders use RML covenants, calculated from unrestricted cash and average monthly burn, to measure runway and trigger engagement about equity funding, refinancing, or workout.

workaround

When cash-flow evidence is weak, providers may use controlled collateral, shorter tenor, covenants, reporting, amortization, pricing, or other credit enhancements, but these do not eliminate repayment risk.

workaround