When creating a project on Axial, by specifying the types of debt you’re interested in, you can narrow down the list of lenders who appear as Recommended Targets based on the debt that they provide.

Axial’s recommendation engine currently supports 17 debt types. If you’re unfamiliar with these, here is some basic info on each:

Senior debt – frequently issued in the form of senior notes or referred to as senior loans, is debt that takes priority over other unsecured or otherwise more “junior” debt owed by the issuer. Senior debt has greater seniority in the issuer’s capital structure than subordinated debt, or junior debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment.

• Asset-based lending
  • Accounts receivable financing & Factoring – a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. A business will sometimes factor its receivable assets to meet its present and immediate cash needs.
  • Inventory financing & Equipment financing – a business loan secured by inventory or equipment collateral (assets). The loan, or line of credit, is secured by inventory, accounts receivable, and/or other balance-sheet assets. This type of loan is often used to meet various cash flow needs of companies, for example, meeting payroll or building inventory.
• Secured debt – a type of debt backed or secured by collateral or specific assets which can be sold in order to reduce the risk associated with lending.
• Unsecured debt – a type of debt that is not backed by an underlying asset, and thus is less risky than secured debt for the lender, but also comes with typically higher interest rates.
• Cash-flow financing – a type of debt backed by a company’s expected cash flows, often used by companies seeking to fund their operations, acquire another company, or make another major purchase. This allows companies to obtain financing today as opposed to some point in the future.
• Project financing – a loan structure for long-term infrastructure, industrial projects, and public services that primarily relies on the project’s cash flow for repayment. The project’s assets, rights, and interests can be held as secondary collateral.
• Term loans – a loan for a specific amount that has a specified repayment schedule and either a fixed or floating interest rate. An established small business with sound financial statements and the ability to make a substantial down payment to minimize payment amounts might find this an attractive option.
• Revolver loans – a loan with a specified term that allows the borrower to draw down, repay, and re-draw loans on the available funds during the term of the loan, unlike a term loan.
• Small Business Administration loans – business loans guaranteed to banks and lenders by the Small Business Administration which alleviates the risks for lenders.  

Subordinated Debt – (or junior debt) debt which ranks after other debts if a company falls into liquidation or bankruptcy. It ranks below: the liquidator, government tax authorities, and senior debt holders in the hierarchy of creditors. Debt instruments with the lowest seniority are known as subordinated debt instruments. Because subordinated debts are only repayable after other debts have been paid, they are more risky for the lender of the money. The debts may be secured or unsecured. Subordinated loans typically have a lower credit rating, and, therefore, a higher yield than senior debt.

• Mezzanine Debt –  is the middle layer of capital that falls between secured senior debt and equity. This type of capital is usually not secured by assets, and is lent strictly based on a company’s ability to repay the debt from free cash flow.
• Secured Debt – Refer to section in Senior Debt
• Unsecured Debt – Refer to section in Senior Debt

Convertible debt – a fixed-income debt security that pays interest payments but can be converted into a predetermined number of common stock or equity shares. These are a flexible financing option for companies which offers investors a type of hybrid security, with the features of a bond such as interest payments while also having the opportunity of owning the stock itself.

Unitranche Debt – a type of debt that combines senior and subordinated debt into one debt instrument; it is usually used to facilitate a leveraged buyout. The borrower would pay one interest rate to one lender, and the rate would usually fall between the rate for senior debt and subordinated notes.

Venture Debt – debt financing provided to venture-backed companies by specialized banks or non-bank lenders that can complement equity financing.