October 28, 2022

Equity Cure Provisions in Middle-Market, Sponsor-Backed Credit Agreements

An “equity cure” is a type of legal provision often found in credit agreements governing loans that finance acquisitions by private equity sponsors. In an alignment of interests between lenders, private equity sponsors, and their portfolio company borrowers, these provisions allow sponsors to retroactively cure their portfolio companies’ financial covenant defaults by making a cash equity contribution typically treated as a dollar-for-dollar increase to the company’s adjusted EBITDA in the amount necessary to cause compliance with the company’s financial covenants for the applicable measurement period. Equity cure provisions benefit all parties involved by providing a clear protocol for navigating economic downturns or other periods of financial difficulty in a manner that prioritizes de-risking the lender’s credit exposure while protecting the company’s viability and sustaining the sponsor’s commitment to the success of the business.

For Community Banks, The Sun Also Rises: Solar Tax Credit Investments Now More Accessible

For more than a decade, large financial institutions nationwide, joined by Fortune 500 giants like Apple and Google, have been the dominant players in solar investment tax credits (ITCs). Driven by federal incentives, these companies have provided funding for the largest solar projects in the country, collecting healthy returns while raising their corporate profiles as environmental/social/governance (ESG) leaders.

Education & Trust Matter When Dealing with Digital Assets

The Biden Administration’s March executive order seeking information on digital asset usage and security set a flurry of activity into motion. This included a mandate for the Treasury Department to deliver a report on the future of money and payments systems. The agency issued a public request for comment in July, and SRM quickly responded, drawing from our detailed and ongoing coverage of cryptocurrency and other digital assets.

Not Just Nonprofits: CDFI Banks, In Partnership, Leverage Private and Public Funds to Enhance the Communities We Serve

The August edition of Colorado Banker shined a light on the power of Community Development Financial Institutions (CDFI) to make big impacts in partnership with the people in the communities they serve. It explained the origins of CDFIs and what has become a social and economic justice movement within the community development finance field.