Venture Debt Exercise

Calculate the effective rate among the three potential lenders using an Excel file. Be prepared to discuss the pros and cons of each term sheet

Lender #$1$ Lender #$2$ Lender #$3$

Commitment $$2,000,000$ $$2,000,000$ $$2,000,000$

Interest only period $6$ months $12$ months none

Amortization period $42$ months $36$ months $48$ months

Prepayment penalty $3-2-1$ none $$20,000$

Interest rate Prime $+2\%$ Prime $+1\mathrm{.}75\%$ SOFR $+6\%$

Warrant coverage $10\%12\%5\%$

Loan Fees $$10,000$ $$15,000$ $$12,000$

Warrant strike price Last round Next round Last round

Warrant stock Preferred Preferred Common

Last round price $$1\mathrm{.}00$ $$1\mathrm{.}00$ $$0\mathrm{.}10$

Expected next round price $$2\mathrm{.}00$ $$2\mathrm{.}00$ $$0\mathrm{.}40$

Expect the warrants to be exercised at $3$x the strike price at month $60$