Who We Are

WHO

WE ARE

DEFINITION:
Level ground; equal footing/terms;
what is right/fair/equitable, equity.

"Aequum" is latin for “what is right/fair/equitable”. Small businesses that don’t qualify for bank loans have many options available to them, however often times these options come with conditions that make it difficult for small businesses to succeed. We believe that relationships are the key to success and as such, hold Trust, Integrity, and Respect, as part of our core values. At Aequum, we strive to provide financing that is right, fair, and equitable to all parties.

OUR STORY

Aequum is a company started by four career lending executives and entrepreneurs with over 100 years of collective experience. We are a tech-enabled commercial lending platform for companies looking to find financing between $2MM and $15MM who are not otherwise eligible for traditional bank financing. Aequum’s platform allows for efficient underwriting, funding, servicing, and portfolio management to ensure low overhead costs that can be passed on to our borrowers. We are taking a consultative lending approach and bringing Environmental, Social and Governance (ESG) policies to improve our borrower’s operations and ultimately provide a path to traditional bank financing. Using this strategy, we will create an ecosystem where each stakeholder in the process (the borrowers, bank partners, investors, and sponsorship) are incentivized to optimize ESG philosophies, in particular governance, at the borrowers level.

OUR MISSION

To level the commercial finance competitive landscape by providing lower middle market borrowers, that have the potential and willingness to have a meaningful environmental, social, or corporate governance impact, access to structured capital and top tier back office service solutions allowing them to compete on a more competitive scale, and in time, gain access to more traditional capital.

OUR VISION

To create a business lending and partnering ecosystem that combines industry-based specialty finance expertise and best practices with proprietary technologies, process engineering and methodologies resulting in accelerated, dynamic and better business outcomes.

WHAT IS

ESG

ESG stands for Environmental, Social and Governance, and refers to three central factors in measuring the long term sustainability of a company.

Environmental criteria examine how a business contributes to and performs on environmental challenges (e.g. waste, pollution, emissions, climate change, and treatment of animals).

Social criteria look at how the company treats people (e.g. diversity and equal opportunities, work environment, health and safety, and community).

Governance criteria examine how a company is governed (e.g. accurate and transparent accounting, anti-corruption and bribery, governing structure, checks and balances, and board diversity and structure).

HOW DO WE COMBINE ESG AND

COMMERCIAL LENDING?

Aequum Capital Founder, LLC (Aequum) looks at companies in-depth from ESG perspectives to evaluate their standing relative to peers through a proprietary scoring model. Aequum strongly believes that companies that improve their ESG score, specifically as it relates to Governance can improve performance and its ability to repay debt.

Just as with other credit metrics, Aequum expects improving ESG profiles to lead to a lower cost of capital and have built this belief into our underwriting practices to reward our borrowers for improving their ESG score. We believe companies that pursue meaningful ESG improvements should increase the potential to outperform as the cost of capital declines and credit spreads tighten. Conversely, if a company has material ESG risks and is not actively mitigating these risks and improving their ESG profile, it is very likely that Aequum’s ability to provide competitive terms would suffer. Identifying and measuring ESG risks and opportunities has the benefit of simultaneously reducing Aequum’s credit risk exposure, while also improving borrower terms.

WHY DOES AEQUUM CARE?

IT MAKES INVESTMENT SENSE

ESG programs are key components of long-term value and business resiliency. When underwriting a non-bank eligible loan, Aequum focuses on extreme scenarios to understand risk associated with a company’s cashflows. Most recenly, the COVID pandemic highlighted the importance of ESG.

Strong ESG programs helped buffer the impacts of the pandemic, hasten recovery, and spur innovation needed to navigate a new normal and reduce risks to additional crises in the future. For example, ESG funds have shown stronger performance than non-ESG rivals during COVID-19 [1][2].

Aequum’s consultative approach is first to improve and then move to the environmental and finally social tenants of the ESG philosophy by working directly with the company reduces risks that could negatively affect company and their ability to repay debt.

[1]Research [2]Research

OUR LENDING

FOCUS

Refinancing

Refinancing business debt is a common way for companies to improve their financing by replacing existing debt with new more favorable terms. In addition to improving terms, companies often consolidate debt to reduce the hassle of keeping track of multiple loans that often have their own covenant and reporting requirements thereby reducing company strain on resources.

Recapitalization

Recapitalization is the process of restructuring a company’s debt and equity mixture, often to stabilize a company’s capital structure. The process mainly involves the exchange of one form of financing for another, such as removing preferred shares from the company’s capital structure and replacing them with debt.

Software and Technology

Technology can be expensive to implement with upfront costs such as hardware, software, deployment and implementation costs, and training costs. Aequum understands, appreciates, and encourages the development of technology to improve governance that will eventually improve company profitability.

Machinery and Equipment

Equipment loans allow businesses to purchase necessary assets to conduct business. The purchased equipment then serves as collateral for your loan. That means that you can sometimes get better rates for equipment loans than you would qualify for with other types of loans and are typically expedited loans as a result of the collateral.

Growth Capital / Expansion

Growth or Expansion financing provides capital required to support an opportunity that would significantly increase company’s sales. It is usually required by established or mature companies which look to restructure or explore new markets to take advantage of growth opportunities and are typically secured by company’s assets.

Accounts Receivable / Inventory

A company’s receivables and inventory are used to get a cash advance from a lender. The receivables and/or inventory act as collateral for the advance. With receivable/inventory financing, an advance is made on a percentage of total receivables or inventory amount. Company can use the advance to cover business expenses while waiting for customers to pay.

Merger and Acquisition

Business mergers and acquisitions are strategic ways to grow or diversify the scope and reach of a company. M&A loans are taken for the purpose of buying or merging with another company and lack sufficient liquid capital to complete transaction. M&A debt financing works best when the acquisition target has tangible value and/or will immediately contribute to debt coverage post merger or acquisition.