Beyond bank loans: private credit and family-office capital

The categories, and what each one is buying

These are broad categories rather than products, and a real transaction often combines two of them. The useful distinction is what each provider is fundamentally underwriting.

• —Senior bank debt. Underwrites repayment capacity and collateral against defined credit criteria. Generally the lowest cost of the debt options and the most conditional: documentation standards, covenants, and reporting obligations are the price of the rate.
• —Asset-based facilities. Underwrite the assets themselves — receivables, inventory, equipment — rather than trailing earnings. Availability moves with the asset base, which suits a working-capital-hungry business and demands genuinely reliable operational reporting.
• —Non-bank and private credit. Underwrites cash flow with more flexibility on structure and covenant package, and prices that flexibility. Often faster and more willing to look at a situation that does not fit a credit box, provided the cash-flow story holds together.
• —Family-office and private-investor capital. Underwrites the business and the operator over a longer horizon, frequently with a strategic or sector interest. Terms are bespoke rather than programmatic, the relationship carries more weight, and the diligence is often more personal.
• —Equity and structured equity. Underwrites the future rather than the obligation. Removes the servicing burden and takes ownership or control rights in exchange, which is a different transaction from borrowing regardless of how it is packaged.

The objective decides the conversation

The most common error is starting from availability rather than from purpose. Capital taken for the wrong reason is expensive even at a good rate.

A seasonal working-capital gap is a different problem from a facility expansion, which is different again from an acquisition, a shareholder buyout, or a period of margin repair. Each implies a different tenor, a different tolerance for covenants, and a different answer to the question of whether ownership should change.

What is common to all of them

The instruments differ; the underlying file does not differ nearly as much as owners expect. Every category on the list wants current and reconcilable historicals, a forecast whose drivers are visible, a credible downside, and a specific use of proceeds.

That is worth knowing before choosing a direction, because it means the preparation is not category-specific. A company that has done the readiness work is better positioned in every one of these conversations, including the ones it has not decided to have yet.

The cost of the wrong first conversation

Approaching a provider before the business can withstand its diligence is not neutral. It consumes months, it consumes management attention during a period when the underlying opportunity is still moving, and it can leave a record.

It also tends to compress the options. A company that has been through two unsuccessful processes and now needs capital urgently is choosing from a narrower and more expensive set than the same company would have faced a year earlier with the same fundamentals and a better file.

Where Gravity sits in this

Gravity is a business consulting firm, not a lender, a broker, or a placement agent. It does not raise capital, negotiate transactions, prepare investor packages, or take transaction-based compensation.

What it does is the work in front of that: identifying the financial, operating, and valuation blockers that would weaken the company under any of these providers' scrutiny, helping management address them, and — when the company is ready — making the necessary introductions to its network of financing partners while continuing to advise through the process and after it.