Your Debt Raising Strategy Starts Before the Pitch

Even founders with debt raising experience risk losing momentum without a proactive process. Not being fully prepared for funding can show up in different ways. It could be that your models aren’t finalized, or that the narrative changes mid-pitch. Or maybe lenders flag repayment risk based on burn rate and runway. But the reality is that all of these scenarios can limit your debt raising efforts.

Your team won’t see the best outcomes if you’re reactively catching up with diligence requirements. Instead, growth-stage companies have to treat preparation as an integral part of the larger strategy. The quality of your preparation will directly impact your negotiating power, timeline, and final terms from lenders.

With lenders focused on elements like risk, repayment, and long-term viability, your debt raising strategy should start well before you make your first pitch. To avoid setbacks and maintain control of the process and outcome, it’s a good idea to anticipate diligence and prepare financials in advance.

If you need to get your company and financials ready for lenders, you’ll need to structure and present your debt raise plans first. Here’s how to get it right before you pitch.

If you’re treating debt like a backup plan, you won’t see it for what it is: a highly effective tool for growth.

Some teams default to common use cases like extending runway or covering operations when justifying their capital ask. However, your potential lending partners might expect more clarity to help them share your vision. How will this capital directly support your company as you achieve a stronger position and reach your future goals?

The proactive approach involves aligning your raise with specific initiatives that lead to value. The additional capital could help accelerate GTM, fund inventory, or bridge to a near-term equity round. That extra information will encourage lender confidence and set the stage for more favorable terms.

Every debt deal varies depending on its unique combination of needs, borrowers, and lenders. To get the right structure for your growth-stage company, you’ll need to present your revenue profile, burn rate, and balance sheet among other financial details.

Here are a few common formats to consider:

Each option comes with advantages and trade-offs. When anticipating structure, plan to account for both your cash flow today and where you expect the company to be in 6–12 months.

Lenders will assess the logic of your ask using debt service coverage ratios (DSCR), burn rate, and margin analysis. It’s important for the numbers to line up with your capital expectations. If not, you can lose credibility or end up with burdensome repayment terms.

Smart debt raising means asking for the precise amount you need. Planning for that amount ahead of time will protect your runway, maintain flexibility, and show judicious financial management.

Lenders will communicate their expectations around covenants, minimum cash thresholds, limits on future raises, and revenue benchmarks. These terms are negotiable, but only if you’re prepared.

Before you start pitching, your team should identify what your company can realistically commit to and where you’ll need flexibility. Your goal isn’t necessarily to get the lowest rate. Instead, you want to secure the deal structure that best fits your business as it grows. Take the time to familiarize yourself with the finer points and include them in your negotiations.

You probably already have a great pitch deck that tells your story. But to close the deal, you’ll need a great lender pack.

That means coming prepared with a brief lender memo or one-pager that includes:

Packaging your raise like this will help position you as a reliable borrower and accelerate the underwriting process.

While it’s encouraging to get a yes, you need to make sure you’re getting the right yes when you’re raising debt.

The best terms are easier to come by when you have options as opposed to a “take-it-or-leave-it-offer.” But conducting a structured, competitive process that benchmarks multiple lenders and gives you leverage at the negotiating table can demand a lot of effort. When assessing their top three internal risks, 48% of CFOs mentioned efficiency and productivity. As you craft an effective debt raising strategy and prepare financials that accurately reflect your growing company’s position, support from outside experts can save you significant time and resources.

With experience guiding and facilitating debt raising strategies for growth-stage companies, 5th Line can help you maximize optionality and fit. We’ll help you identify the right lenders and manage negotiations to secure the best debt deal for your company’s financial strategy.

Debt can be a real driver of growth when it’s structured the right way.

To get terms you can stand behind, start preparing before the pitch. Define your goals, package your raise, and bring in the right support team early. With a complete debt raising strategy, you’ll be better able to move fast, negotiate with leverage, and choose the financing that allows your team to scale.

Looking for help navigating your next debt raise? Connect with 5th Line to learn how we help growth-stage companies secure strategic financing.