Knowledge base
Private Credit, explained.
A reference library on how we invest in private credit: the concepts and the mechanics, the structures and terms, our process, a glossary and the questions we hear most. Written by our team for owners, operators, founders and advisers.
- Chapters
- 8
- Entries
- 35
- Questions answered
- 72
Contents
Start anywhere.
Each chapter opens with an overview that links every entry in it. Questions are answered in the last chapter.
Chapter 1
Private credit fundamentals
Overview: private credit fundamentals
What private credit is, why it has grown, how a senior secured lender thinks and how this knowledge base is organized, from loan types and documentation to underwriting, process and workouts.
What direct lending is, and who does it
Direct lending is a loan negotiated between one borrower and a lender that holds it. Here is how it works, who the lenders are and when a borrower is better served by a direct lender than by a bank or the bond market.
Lending from permanent capital
Most private lenders manage other people’s money on a clock. A lender with permanent capital does not. This entry explains the difference and what it means for borrowers, from the term sheet to an extension request.
The capital structure and why seniority matters
Who gets paid first, and from what, determines how much a lender can lose. This entry walks through first lien, second lien, unitranche, mezzanine and preferred equity, with an illustrative loss waterfall.
Chapter 2
Loan types and focus areas
Overview: loan types and focus areas
The loans we make, the collateral behind each and how they fit together: real estate bridge and construction, asset-based lending, NAV loans, lender finance, royalty monetization and senior secured corporate credit.
Real estate bridge and construction loans
How transitional real estate loans work: acquisition and bridge-to-permanent loans, construction completion and heavy renovation, future funding, draw controls, interest reserves and the exit.
Asset-based lending explained
How asset-based loans work: revolvers and term loans secured by receivables, inventory and equipment, sized by a borrowing base and protected by cash control rather than by EBITDA multiples alone.
NAV lending explained
How net asset value (NAV) loans work: borrowing against a diversified portfolio of private investments, loan-to-value tests, cash sweeps, concentration limits and what happens under stress.
Lender finance (loan-on-loan) explained
How lender finance works: senior facilities to specialty lenders secured by their own loan pools, with eligibility criteria, advance rates, concentration limits, performance triggers and step-in rights.
Royalty and contract monetization
How lenders provide capital today against royalties, licenses and long-term contracts: what qualifies, how the loan is sized to verifiable cash flow, collections sweeps and the legal work behind the security.
Senior secured term loans, unitranche and special situations
How senior secured corporate term loans, unitranche facilities and rescue or special situations loans work, and how we approach each within a first-lien, collateral-first discipline.
Chapter 3
Terms and documentation
Overview: loan terms and documentation
How a private loan moves from a few pages of terms to a full set of closing documents, and what each part of that paper is for.
Pricing, fees and OID
How a private loan is priced: base rate, spread, floor, fees and original issue discount, and how they combine into the yield a lender earns and a borrower pays.
Covenants explained
Affirmative, negative and financial covenants: what they are, how maintenance and incurrence tests differ, and how cures and waivers work in practice.
The borrowing base explained
How asset-based and lender-finance facilities tie availability to collateral: eligibility, advance rates, reserves, borrowing base certificates and cash control.
Collateral, security and guarantees
How a lender takes and perfects security over real estate, personal property, accounts and equity, and how guarantees from sponsors and principals add a second source of repayment.
Intercreditor agreements
When more than one lender finances the same borrower, the intercreditor agreement decides who is paid first, who controls enforcement and what the junior lender can do to protect itself.
Amortization, call protection, PIK and interest reserves
How principal and interest are scheduled in a private loan, what prepayment protection looks like, and how PIK interest and interest reserves fit a loan to a borrower’s real cash flow.
Chapter 4
Underwriting
Overview: how we underwrite a loan
The four questions behind every senior secured loan we consider: how much cushion, can the borrower carry it, what repays it and is the value real.
Leverage: loan-to-value, loan-to-cost and debt multiples
What LTV, LTC, advance rates, debt multiples and loan-to-NAV measure, how they interact and why the tighter test usually governs the size of a loan.
Coverage and liquidity: DSCR, debt yield, interest coverage and exit analysis
How lenders test whether a borrower can carry a loan and whether the repayment is realistic: DSCR, debt yield, FCCR, liquidity and the exit.
Cash flow versus asset-based underwriting
Cash-flow lenders size to earnings; asset-based lenders size to collateral. How the two approaches differ, where they meet and why we lean toward collateral.
Collateral valuation and diligence
Appraisals, field exams, third-party reports, lien searches and background checks: the diligence a senior secured lender performs, by collateral type.
Chapter 5
Working with Caldrion
Overview: working with Caldrion
How borrowers, sponsors and debt brokers bring us a loan request, what happens at each step and what changes once a loan is on our balance sheet.
How to request a loan: what to send
The materials that let us form a view quickly, organized by collateral type, plus the questions we ask first and the reasons requests most often fall short.
From term sheet to funding and servicing
What our term sheet covers, how confirmatory diligence and documentation run, the conditions to closing and what servicing looks like for the life of the loan.
Chapter 6
Workouts and enforcement
Overview: workouts and enforcement
What happens when a loan does not go to plan: the warning signs, the options short of enforcement and the remedies a senior secured lender holds if talks fail.
Defaults, waivers, forbearance and restructuring
The kinds of default in a private loan, how lenders typically respond, what goes into a forbearance agreement and the tools used to restructure a loan without enforcement.
Enforcement and remedies
A general guide to the remedies of a senior secured lender in the United States: foreclosure, UCC sales, receivership, deeds in lieu, guarantees and the effect of bankruptcy.
Chapter 7
Glossary
Overview: a private credit glossary
Plain definitions of the terms used in private credit term sheets, credit agreements and workouts, from acceleration to workout, each linked to the entry that covers it in depth.
Chapter 8
Frequently asked questions
FAQ: working with us
How to bring Caldrion a loan request, what to send, who decides, how we protect brokers and what happens after closing.
FAQ: loan terms and pricing
Loan size, pricing, fees, term, extensions, amortization, prepayment, PIK, covenants and guarantees, in short answers.
FAQ: underwriting and collateral
How we measure leverage and coverage, which collateral we lend against, how we value it and what diligence to expect.
FAQ: loan types and focus areas
Bridge, construction, asset-based, NAV, lender finance and royalty loans explained in short answers, with our view on mezzanine and unitranche.
FAQ: private credit basics
What private credit is, why borrowers use it, what seniority means and what happens when a loan defaults, from forbearance to foreclosure.
Knowledge base
Need a lender who can move quickly?
Borrowers, sponsors and debt brokers reach a decision-maker through one short form. We read every submission and aim to reply within a few business days of receiving a complete package, whether or not we proceed.