How RGC Works

ProcessInvestment Without Ownership:

Few choices exist for small businesses seeking growth capital – mainly senior bank debt or expensive equity investment. As they reach their bank’s lending limit, business owners may turn to other sources of capital, such as personal credit cards, venture capital or an equity partner. Whereas the latter two options typically require relinquishing some ownership of the company, Regional Growth Capital provides a unique alternative – investment without ownership.

Candidates include companies that demonstrate significant potential for success and value the investment as an attractive alternative to venture capital or other forms of equity investment. Companies from a variety of industry types – manufacturing, distribution, service, and retail – based in eastern Missouri and southwestern Illinois are eligible. Regional Growth Capital makes investments of $50,000 to $500,000 that can be used to help fund organic growth, acquisition or recapitalization plans.




Investment Criteria:

Regional Growth Capital makes investments in the form of subordinated financing of up to $500,000 to qualified applicants. A qualified applicant’s profile reflects the following:

  1. A growing, locally-based company (Missouri or Illinois);
  2. Where the available senior debt is not adequate to finance the company’s organic growth, an acquisition or a recapitalization; and
  3. There is sufficient cash flow to cover the RGC’s debt service.

As part of the approval process, a committee considers several guidelines, including:

  • Cash-flow coverage
  • Management capabilities
  • Business plan
  • Debt-to-equity ratio
  • Personal credit scores of majority and significant shareholders



Price Structure:

Regional Growth Capital’s pricing structure is unique in that it provides companies with needed capital without taking equity or options, or requiring a seat on its board of directors. It provides crucial capital, allowing small businesses to accomplish or even accelerate their growth objectives without requiring them to forfeit early equity at a significant cost.

How it works:

  • An origination fee of three percent of the investment amount.
  • Fully amortized payments of principal and interest over 60 to 84 months with the possibility of interest-only for the first six months to five years.
  • A risk premium (accrued each year but payable only at the end of the term) usually equal to cumulative fees of five to 10 percent of the principal balance at the beginning of the anniversary year for each year, or part of any year, that there is an unpaid balance. The Risk Premium is compensation to RGC in recognition of a) the relative risk taken by RGC and b) RGC’s contribution to the enhanced value of the client company.
  • No pre-payment penalty (i.e., the risk premium stops accruing as of the year any early final full payment is made).
  • Personal guaranties may be required.



The Process:

Once an applicant has completed and submitted an application and all supplemental materials, along with a non-refundable application fee, Regional Growth Capital will begin its due diligence process. In determining each applicant’s qualifications, the RGC investment committee reviews each application. The approval process typically takes six weeks. If approved, and once the applicant accepts the terms offered, a company can expect to close and receive its investment in anywhere from two to three weeks.