Growth and expansion capital

Growth finance suits companies with a proven product or service and demonstrable demand, where the pace of opportunity — new markets, additional capacity, or consolidation through acquisition — exceeds what retained earnings can fund. It applies to profitable businesses seeking non-dilutive debt as much as to earlier-stage, high-growth companies where venture debt or recurring-revenue structures are more appropriate.

It is generally not suited to pre-revenue businesses with no demonstrable customer traction, where equity funding remains the more appropriate route, nor to one-off working capital needs better addressed through a revolving facility.

Conventional growth debt is a term loan sized against historic or forecast EBITDA, drawn in a single tranche or in stages tied to agreed milestones, and repaid over three to five years. Recurring-revenue facilities instead size the loan against annual recurring revenue and net retention, suiting subscription businesses that are not yet consistently profitable but generate predictable cash collections.

Venture debt is typically structured as a term loan alongside, or shortly after, an equity round, sized as a percentage of the round or of annualised revenue, and often includes a small warrant giving the lender a modest equity upside alongside its interest income.

For cash-flow and recurring-revenue lenders, the key metrics are revenue growth rate, gross margin, customer concentration, net revenue retention and runway to the next funding event or to profitability. For conventional growth debt, historic EBITDA trend and the specific, funded use of proceeds are central to underwriting.

Lenders also examine the quality and experience of the management team, the existence of institutional or credible equity backing, and whether the growth plan is specific and costed rather than general working capital, since debt is generally sized against a defined and monitorable use of funds.

Conventional growth debt is typically priced at 4–8 per cent over base rate; venture and recurring-revenue debt is priced higher, often 8–14 per cent, reflecting the earlier-stage or less asset-backed nature of the borrower, sometimes supplemented by a warrant covering a low single-digit percentage of the facility value.

Pricing is driven by revenue predictability, gross margin, existing investor quality and the strength of the growth thesis; businesses with high customer retention and clear unit economics achieve materially better terms than those with volatile or unproven revenue.

GFG reviews financial performance, growth plans and existing capital structure, then approaches growth debt providers, venture debt funds or strategic and family office investors best matched to the company's stage and sector.

Term sheets are typically available within two to four weeks of a complete information pack, with funding following four to eight weeks later once diligence and documentation are complete.