# Transaction Structure

**CO-LENDING AGREEMENT** Agreement made between two or more lenders concerning how they will jointly interact with the same borrower.

**CROWDFUNDING** Process of soliciting capital from the general public, including non-accredited investors, without the use of a registered underwriter, often leveraging internet platforms.

**DPO** Direct Public Offering is a structure in which a company offers stock directly to the general public, including non-accredited investors, without the use of a registered underwriter.

**EQUIPMENT FINANCING** Loan made to an enterprise with the purpose of purchasing equipment.

**ESCROW ACCOUNT** Contractual arrangement in which a third party (escrow agent) receives and disburses money or property for the primary transacting parties, based upon agreed conditions.

**ISA** Income Sharing Agreement is a debt repayment structure based on a percentage of future or current income for a discrete time period. Most commonly applied to student loans.

**IPO** Initial Public Offering is a structure in which a company uses an underwriter to establish an initial value for stock ownership of the company, then sells the stock on public exchanges to investors.

**MORTGAGE** Debt obligation secured by real estate owned by the borrower.

**PARTICIPATION AGREEMENT** A lending institution agrees to fund a portion of a larger loan commitment and allow a lead funder to administer the loan.

**PAY-FOR-SUCCESS** Deal structure in which repayment terms are based on the achievement of pre-established, observable metrics, usually defined by social impact. Social Impact Bonds are an example.

**RECOVERABLE GRANT** Grant made under predetermined circumstances that can become repayable, potentially with interest. Recoverable grants are different from loans in that they are forgivable.

**ROYALTY FINANCE** Form of debt in which lenders agree to be repaid based on an agreed upon formula, usually a percentage of revenue (a royalty).

**SELF-LIQUIDATING EQUITY** Form of structured exit in which an equity position is repaid using a pre-determined formula (such as available free cash flow) up to a cap.

**SPV** Special Purpose Vehicle is a standalone legal entity formed for the purpose of financing a specific project or business operation, often on a temporary basis.

**STRUCTURED EXIT** Pre-negotiated arrangement for an investor to sell a debt or equity position at a later date to realize an investment gain. This replaces traditional exits in which the investor is paid out when the company is acquired.

**TAX CREDIT STRUCTURE** Transaction in which the investor pays in advance for expected future tax credits related to project finance.

**VARIABLE DIVIDEND VEHICLE** Form of equity in which shareholders receive distributions (dividends) of available excess cash based on an agreed upon formula.