BORROWERS
PCM finances short-term loans collateralized by real estate or other quick-sale collateral. The rates are higher than long term financing, but they are at market rates for typical short-term transactions. These products are designed as interim financing solutions prior to the client obtaining long term financing.
PCM is able to fund loans in a more-timely manner than available at traditional lending institutions. PCM provides borrowers with short-term or bridge loans, typically because the borrower needs the funds quickly or does not have the cash flow to support bank financing.
Borrower’s Alternative:
The alternative source for working capital for the PCM borrower is usually the decision to bring on a new equity partner and thus grant away a portion of ownership in their company, indefinitely. As a result, before agreeing to work with PCM, the owners of the company typically will ask themselves:
“Is it worth it for us to rent the capital
For one, two or three years in order to achieve our business goals
Or
should we bring on a new equity partner and permanently
give a part of our company away?”
The answer is inevitably very simple ROI arithmetic: “is the cost of renting our capital justified against the expected EBITDA growth over the next one, two or three years”. Most good business minds find that the ROI is very attractive, that is, the cost of renting is far outweighed by the aggregate growth in profits and the resulting enhanced enterprise value.