For business loan brokers: This guide explains Capitalization Tables: What Business Loan Brokers Should Know through the lens of evaluating a client’s situation, preparing the file, and discussing financing options clearly.
A cap table, or capitalization table, is a financial document that outlines a company’s equity ownership. It is a summary of the company’s outstanding shares of stock and the corresponding ownership percentages of those shares. The cap table also lists the company’s outstanding stock options and any other equity instruments, such as warrants or convertible debt.
A cap table is important because it helps to understand the company’s equity structure and the ownership stakes of its shareholders. It is also used to determine the value of a company and to evaluate potential financing options.
Why Does a client need a Cap Table?
The client’s banker may be requesting a copy of the client’s cap table for several reasons. One reason could be to understand the equity structure of the client’s company and how it may be impacted by any potential financing transactions. For example, if the client is seeking a loan or investment, the client’s banker will want to understand the ownership stakes of the client’s shareholders and how the financing will affect their equity positions.
Another reason the client’s banker may be requesting a copy of the client’s cap table is to evaluate the potential risk of lending to the client’s company. By understanding the equity structure of the client’s company, the client’s banker can better assess the potential for dilution of equity and the potential impact on the value of the company.
Overall, a cap table is an important financial document that helps to understand a company’s equity structure and can be used in a variety of financial transactions.
Levr helps business loan brokers collect client information, organize documents, prepare lender-ready applications, and manage lender conversations while keeping the client relationship.
How brokers can use Levr
Levr supports business loan brokers as they organize client information, prepare applications, manage documents and communication, and move deals through their lending workflow.