Subordinated loans as an instrument for SME financing

In the course of risk-orien­­ted lending by banks through Basel II, the focus is on the credit­wort­hi­ness of a company. Subor­di­na­ted loans fulfill an equity-rela­­ted func­tion. This can result in a higher over­all credit rating for the company. Subor­di­na­ted loans are loans that are subor­di­na­ted to other payment obli­ga­ti­ons. In the context of a liqui­da­tion of the company’s assets, they ther­e­fore come after all bank and supplier liabi­li­ties in the order of priority. 

Here are 3 ques­ti­ons for Bright Capi­tal, a fund and asset manage­ment company with a focus on debt invest­ments. The company grants subor­di­na­ted loans to medium-sized compa­nies with sales of 10–200 million euros and to real estate projects with a mini­mum finan­cing volume of 5 million euros.