Junior Capital Loan: Flexible Growth Financing for Middle Market Companies

A junior capital loan provides the growth financing your business needs while fitting seamlessly into your existing capital structure. This subordinated debt solution delivers fast, flexible funding that works alongside your senior lenders, giving you access to significant capital without refinancing or replacing your current banking relationships.

Noble Funding has been a premier provider of junior capital loans for over 20 years, funding more than $1 billion to companies across the nation. Our A+ BBB rating with zero complaints since 2005 reflects our commitment to structuring deals that truly work for middle market businesses.

What Is a Junior Capital Loan?

Junior capital refers to debt financing that sits below senior secured debt in the repayment priority hierarchy. When you take a junior capital loan:

• Your existing senior lenders maintain their first priority position
• The junior capital provider accepts a subordinated position
• Both debts operate simultaneously with regular payment schedules
• In case of default, senior lenders are paid before junior capital providers

Junior capital is also known as:

• Subordinated debt
• Second lien debt
• Mezzanine capital (though mezzanine often includes equity features)
• Junior debt financing

This type of financing fills the gap between senior bank debt and equity, providing growth capital without diluting ownership.

The Capital Stack: Where Junior Capital Fits

Understanding where junior capital sits in your company’s capital structure helps explain its role:

The Capital Stack (Top to Bottom)

1. Senior Secured Debt (Highest priority)

• Bank lines of credit
• Term loans with first lien security
• Asset-based lending facilities

1. Junior Capital / Subordinated Debt (Middle priority)

• Second lien loans
• Junior secured debt
• Subordinated notes

1. Mezzanine Capital (Lower priority)

• Often includes equity features
• May have warrants or conversion rights

1. Equity (Lowest priority / Highest risk)

• Common stock
• Preferred equity

Junior capital occupies the space between your bank financing and equity, providing substantial capital without giving up ownership.

Benefits of Junior Capital Loans

1. Preserve Ownership

Unlike equity financing, junior capital does not dilute your ownership stake. You maintain full control of your company.

2. Complement Senior Debt

Junior capital works with your existing bank financing. Lenders like Noble Funding subordinate completely to your senior creditors.

3. Access Significant Capital

Noble Funding provides junior capital from $300,000 to $10 million, supporting substantial business initiatives.

4. Fast Funding

While equity raises take months and bank refinancing takes weeks, junior capital can fund in just days.

5. Flexible Terms

Choose terms that match your business needs. Noble Funding offers 12, 15, or 18-month terms with early payoff options.

6. No UCC Filing Options

Some junior capital, including Noble Funding’s solutions, can be structured without UCC filings on corporate assets.

7. Personal Asset Protection

Qualified borrowers may access junior capital without true personal guarantees, just performance guarantees keeping personal assets separate from business obligations.

Who Uses Junior Capital Loans?

Growth-Stage Companies

Businesses ready to scale but needing capital beyond what their bank will provide turn to junior capital.

Acquisition-Focused Businesses

Junior capital fills the gap between bank financing and the total purchase price in acquisition transactions.

Companies with Tapped-Out Bank Lines

When your bank has extended all available credit, junior capital provides additional capacity.

Businesses with Seasonal Needs

Companies preparing for peak seasons use junior capital for inventory, staffing, and working capital.

Government Contractors

Contractors winning new awards often need working capital to ramp up operations while existing bank lines support ongoing work.

Companies Bridging to Larger Events

Businesses waiting for a refinance, equity raise, or major contract use junior capital to bridge the timing gap.

Noble Funding: Junior Capital Specialists

Noble Funding has provided junior capital solutions to middle market companies since 2005. Here is what distinguishes our approach:

Truly Subordinated

Our junior capital is fully subordinated to any bank or senior secured lender. We sign appropriate intercreditor agreements when required and work cooperatively with your existing senior secured lender.

Rapid Deployment

We can fund $2 to $3 million in just 2-3 business days. When timing is critical, speed matters.

Substantial Amounts

From $300,000 to $10 million, we provide junior capital amounts that support meaningful business initiatives.

Flexible Structures

Our 12, 15, or 18-month terms include six months of early payoff discounts. We match the financing to your business cycle.

Clean Balance Sheet Options

Noble Funding can structure junior capital without UCC filings on your corporate assets, maintaining flexibility for other financing.

Personal Asset Protection

We offer structures without true personal guarantees, separating your business debt from your personal finances.

EBITDA Flexibility

Noble Funding works with companies that have positive or negative EBITDA. We evaluate your overall business potential, not just current profitability.

Proven Track Record

With over $1 billion funded and an A+ BBB rating with zero complaints, Noble Funding delivers results.

Focus on Middle Market

We specialize in companies with $5 million to $150 million in annual revenue, the backbone of the American economy.

Common Uses for Junior Capital Loans

Working Capital for Growth

A professional services firm with $25 million in revenue had maximized their bank line. They needed $1.5 million for working capital to pursue larger contracts. Noble Funding’s junior capital filled the gap, enabling growth without refinancing.

Acquisition Support

A manufacturing company wanted to acquire a competitor for $8 million. Their bank provided $5 million in senior financing. Noble Funding’s $3 million junior capital loan completed the deal without equity dilution.

Seasonal Inventory Buildup

A consumer products company needed $2 million for inventory before the holiday season. With their bank line committed to receivables, junior capital enabled them to stock up for peak sales.

Government Contract Ramp-Up

A defense contractor won a new $15 million contract. They needed $2 million to hire staff and purchase materials. Noble Funding provided junior capital quickly, allowing them to begin work immediately.

Bridge to Permanent Financing

A healthcare company was closing a major refinance in 90 days but needed capital immediately. Our junior capital bridged the gap until the larger facility closed.

Real Estate Holding Costs

A development company needed bridge financing to cover holding costs on a property. Junior capital provided the solution without disturbing their primary lending relationships.

The Junior Capital Process with Noble Funding

Step 1: Initial Conversation

We discuss your business, existing financing, and capital needs. This helps us understand if junior capital is the right fit.

Step 2: Information Review

We review your financial information:

• Recent financial statements
• Existing loan documents
• Accounts receivable aging
• Bank statements
• Business overview

Step 3: Term Sheet

Within 24-48 hours, we provide a term sheet outlining the proposed junior capital structure.

Step 4: Due Diligence

We conduct focused due diligence, coordinating with your senior lender as needed.

Step 5: Documentation and Closing

Legal documents are prepared and executed. Subordination agreements are finalized with your senior lender.

Step 6: Funding

Capital is deposited to your account, often within 2-3 business days of approval. You are ready to put the funds to work.

Costs and Terms of Junior Capital

Interest Rates

Junior capital typically carries higher rates than senior bank debt because the lender accepts greater risk in the capital structure. Rates vary based on risk profile, size, and term.

Origination Fees

Expect origination fees similar to other commercial financing. All fees are disclosed upfront.

Terms

Noble Funding offers 12, 15, or 18-month terms. Shorter terms mean faster repayment; longer terms provide more cash flow flexibility.

Early Payoff

We provide six months of early payoff discounts, giving you flexibility to retire the debt sooner if desired.

Subordination

Your senior lender may require consent for junior capital. Noble Funding handles this coordination as part of our process.

Frequently Asked Questions

What makes capital \”junior\”?

Capital is junior when it sits below senior debt in repayment priority. Junior capital providers get paid after senior lenders in case of default.

How is junior capital different from mezzanine financing?

Junior capital is purely debt. Mezzanine financing often includes equity features like warrants or conversion rights. Noble Funding provides straightforward junior debt without equity components.

Will my bank approve a junior capital loan?

Most banks accept junior capital because their senior position remains protected. Noble Funding coordinates with your bank when required to obtain necessary inter-creditor agreements.

How much junior capital can I get?

Noble Funding provides $300,000 to $10 million in junior capital for companies with $5 million to $150 million in annual revenue.

Do I need to be profitable to get junior capital?

Not necessarily. Noble Funding works with companies that have positive or negative EBITDA. We evaluate your overall business situation.

How fast can I receive junior capital?

Noble Funding can fund in 2-3 business days for qualified borrowers, much faster than bank refinancing or equity raises.

Is collateral required?

Requirements vary. Noble Funding can structure junior capital with no UCC filings on corporate assets for qualified borrowers.

Access Junior Capital from Noble Funding

When your business needs growth capital but bank financing is limited and equity dilution is not an option, junior capital from Noble Funding provides the solution.

Why choose Noble Funding:

• 20 years of junior capital expertise
• Over $1 billion funded to middle market companies
• A+ BBB rating with zero complaints
• Funding in days, not weeks
• $300,000 to $10 million available
• Fully subordinated to existing lenders
• No personal guarantee options
• No UCC filing options

Contact Noble Funding today to discuss how junior capital can fuel your company’s growth while preserving ownership and maintaining your banking relationships. The capital you need is within reach.