Debt Warrants
When used in conjunction with debt financing, warrants offer a way to enhance the lender’s or investor's return on investment beyond the interest payments typically associated with debt. This makes the investment more attractive to more risk-averse investors. A warrant holder has the right, but not the obligation, to purchase a company’s stock at a specific price (known as the exercise price or strike price) within a certain time frame, often below market value.
Warrants are particularly useful for startups and growth companies looking for lower cost capital, attracting lenders by offering future upside. Debt warrants enable businesses that may not qualify for traditional loans to borrow at lower interest rates and delay potential equity dilution until the warrants are exercised.
If the company’s stock does not rise above the strike price, the warrants expire worthless, and the lender only earns the interest on the debt.
Financial Glossary
Use Lighter Capital's glossary to understand common terms used in finance and investing, so you can build financial literacy and make informed decisions for your startup.
Debt Warrants
When used in conjunction with debt financing, warrants offer a way to enhance the lender’s or investor's return on investment beyond the interest payments typically associated with debt. This makes the investment more attractive to more risk-averse investors. A warrant holder has the right, but not the obligation, to purchase a company’s stock at a specific price (known as the exercise price or strike price) within a certain time frame, often below market value.
Warrants are particularly useful for startups and growth companies looking for lower cost capital, attracting lenders by offering future upside. Debt warrants enable businesses that may not qualify for traditional loans to borrow at lower interest rates and delay potential equity dilution until the warrants are exercised.
If the company’s stock does not rise above the strike price, the warrants expire worthless, and the lender only earns the interest on the debt.
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Lighter Capital is the largest provider of non-dilutive debt capital to start ups. Over the past decade, we’ve invested hundreds of millions of dollars into growth companies.
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Lighter Capital's non-dilutive financing provides startups with a quick upfront injection of growth capital based on the business's recurring revenue streams. That means you get to keep your equity and control of the business, and your loan payments are right-sized to what the business can support. Our financing also scales with you as you grow. Apply online to find out how much you may qualify for.
