BVX Knowledge Base
BVX Knowledge Base
M&A University

Term Loan: % of FMV of FA

Fixed Assets (FA) financing is generally a term loan financing facility that requires both the interest payments and the principal payments to pay down the loan. Cash flow of the business is reduced due to principal payments on the loan.


Quick Tips:

Advance Rate:   % borrowing against FMV (Allocated Value) of fixed assetsBorrowing % can be over 100%

Interest%:            % interest rate on the Term Loan

Years:                      Term Loan amortization period

Amortization:    Fixed principal, variable interest (default).  This can be changed in Internal Settings.

Other:                     Additional Term Notes are described below. 


Banks typically finance fixed assets based on the appraised fair market value (FMV) of those assets.  The advance rate on fixed assets, the cost of such borrowing, and the loan amortization period depend on many factors including the type of industry, the customers, the composition of the fixed assets, overall capacity utilization in the industry, portability of the fixed assets, custom vs. non-custom design, general economy, etc.  Fixed assets financing is often not available for small businesses.

  • Enter % Advance Rate on the allocated value of the fixed assets entered in , the % interest cost on this financing, and the loan amortization period. Do not type the % symbol.
  • % Advance Rate can be more than 100%. 
  •  BVX calculates the amount of term loan by multiplying % Advance Rate with the value of the fixed assets entered in
  • Default setting of BVX is to pay accrued interest every year and amortize the fixed asset term loan in uniform annual principal payments over the term of the Note beginning with the first year post-acquisition. (Example: Assume Note = 1000, interest = 10% and Years = 5. Year ? 1 debt service will be 300, consisting of 100 for interest and 200 for principal. At the end of Year ? 1 outstanding debt will be 800. Year ? 2 debt service will be 280, consisting of 80 for interest and 200 for principal). allow mortgage-type constant payment of combined principal and interest.
  • BVX uses fixed assets term loan financing only if it is needed. It borrows against the fixed assets after it has fully borrowed against account receivables and inventory. (Also see .)
  • BVX pre-pays fixed asset term loan per . 
  • SBA financing or Cash Flow lending typically involves a loan amount that is more than the value of the fixed assets. In these situations, enter the allocated value of the fixed assets and enter a high Advance Rate in . Example: If Allocated Value is 50, and SBA or a cash flow lender will provide a term loan of 400, which is 8 times the FMV, then enter 800% as the Advance Rate in Term Loan: % of FMV of FA.
  • Additional Term Loans can be incorporated, subject to and , as described below.

a) Specify a specific amount in .

b) Use .

c) Use by entering Mezzanine Expected ROE to equal interest cost on Mezzanine Financing.

  • A Button for Term Loan:

-  The A button turns green when this feature is in use.

-  This button allows the user to enter a fixed amount for the Term Loan, which is independent of the FMV of the fixed assets.

-  BVX only borrows against the Term Loan to the extent it is needed to satisfy the WBWS requirements.  If Term Loan amount entered is large and cannot be debt-serviced, then BVX will borrow only the amount that can be debt-serviced.