How this calculator works
This calculator shows some of the biggest costs of venture debt include facility fees, legal fees and warrants (i.e. equity) that punish your business as it grows.
We’ve used industry benchmarks to inform this calculator, but you can also add your own instead.
What is Venture Debt?
Venture debt is a form of debt financing for high growth companies. Venture debt lenders typically require a large equity raise to happen prior to lending. They will then carry out detailed due diligence, so the process is likely to take up to six months from start to finish.
These loans come with legal restrictions called ‘covenants’ which restrict certain activities and trigger repayment if breached. Lenders will also take security over all of the company’s assets in case of non-repayment. Most importantly, companies give warrants over shares, which usually provide the biggest return to the lender on sale of the company.
About Interest Repayments
This calculator's interest rate takes into account how monthly repayments reduce the total that's still to be paid over the full term of the loan.
Annual interest rates are typically 12%. Monthly repayments typically include both interest and capital, and are paid each month for the life of the loan - usually around 36 months.
About Facility Fees
Venture lenders will typically charge a facility fee of 2% of the loan amount, payable in cash when the loan is funded. The fee is typically deducted from the amount wired to the company.
About Legal Fees
Both the borrower and lender will have to pay lawyers to draft & negotiate the loan and security documents. The borrower will typically have to pay the lender’s legal fees as well as their own.
Legal fees will vary, but can sometimes result in the borrower paying up to 5% of the loan amount.
The number of warrants granted by the borrower is often expressed as ‘warrant coverage’.
For example a loan for $1.0 million with 20% warrant coverage would give the warrant holder the right to buy 20% of $1 million, or $200K, worth of shares, effectively for free.
The value of these shares can multiply many times over as your business grows. In this example, were your company to be sold at 10x the valuation, you would have given away $2m worth of shares in your company for free! Another way to think about this is that you are effectively paying $2m in shares for the benefit of receiving the $1m loan. And this is on top of all fees and interest you will already have paid. A very expensive decision.
About Uncapped’s Advances
Uncapped offers advances of between $100k - $10m. We charge a fee starting at just 1% per month of term.
We won’t charge a facility fee or legal fees.
In fact, you won’t even need a lawyer as our t&c’s are written in plain English. We don’t take security and there are no covenants to worry about.
And the best part, we won’t take warrants, which means you can keep all the equity for yourself. We also aim to get a funding offer back to you within 24 hours meaning you can get back to running your business.
How does Uncapped work?
Uncapped offers between $100k - $10m funding through a fixed-term or revenue-share agreement. Through our fixed-term agreement we charge a flat fee on capital that starts at less than 1% per month, paid back in fixed equal instalments. Our revenue-share agreement starts at a 6% fee, and capital is paid back as a share of your future revenue. We never charge interest or take equity, personal guarantees, warrants or hidden fees.
Uncapped's fixed-term fee is decided based on your business's performance. The fee is from less than 1% per month for cash with no additional charges.