For Lending Partners

Evaluate the senior secured lane before capital terms move.

This page is for lenders reviewing a Hadto venture as first-priority senior debt. It explains what this credit lane is, who should care, why collateral and downside control matter, how it differs from ordinary bank underwriting, search-fund equity, or unsecured growth lending, and which diligence materials should come out before terms move.

Use this page before the credit story gets ahead of the documents

Who should read this

Senior lenders, private credit partners, and local credit teams evaluating whether a Hadto venture can support a first-priority secured facility.

Why it matters

The credit question is not whether the story sounds promising. It is whether the borrower, collateral, cash controls, covenants, reporting, and workout path can be written clearly enough to underwrite.

What the first conversation should decide

Whether there is a credible senior-debt lane, which diligence materials are missing, and which risks should stop the conversation before term-sheet work starts.

Credit posture

Typical facility size

Hadto treats $500,000 of committed senior capital as the practical floor for this lending lane because documentation, monitoring, and workout overhead are usually inefficient below that size.

Security and tenor

The target facility is first-priority senior secured debt with a 24 to 48 month tenor and a defined repayment path tied to operating cash flow, amortization, refinance, asset sale, or another negotiated takeout.

Use of proceeds and pricing

The usual use cases are launch, working capital, equipment, receivables support, and expansion inside agreed guardrails. Pricing is underwritten as fixed-return credit, not equity-style upside, with a 10 to 12 percent gross annualized yield target only when the deal documents and risk profile support it.

Compare it to adjacent capital paths

Different from normal bank underwriting

A normal bank process can assume familiar collateral, guarantor posture, and reporting habits. Hadto starts by making the capital stack, junior-rights limits, and venture-specific controls explicit.

Different from search-fund or private-equity capital

The senior lane is fixed-return credit. It does not depend on control rights, common-equity value, or an exit multiple to justify repayment.

Different from unsecured growth lending

Hadto does not treat community support, software narrative, or future fundraising as collateral. The repayment case has to tie back to operating cash flow, collateral, covenant tests, and a documented takeout path.

What should come out before a term sheet

The lender should be able to review the repayment case, downside path, and stakeholder priority without relying on a growth narrative.

Borrower and collateral memo naming the obligor, pledged assets, exclusions, guarantees, cash-control terms, and enforcement boundaries.
Capital-stack and payment-waterfall summary showing senior priority, junior payment blockers, reserves, fees, and distribution tests.
Covenant, reporting, and workout packet covering monthly financials, quarterly updates, material-event notices, default triggers, remedies, and escalation rights.

Borrower and collateral package

The borrower is typically the venture operating company or a designated financing subsidiary, with the credit documents stating whether any parent, affiliate, or sponsor guarantee is part of the package.
Senior debt is usually secured by substantially all venture assets, subject to negotiated exclusions, rather than by a vague claim over 'venture assets.'
Typical collateral can include receivables, deposit accounts, equipment, contract rights, and equity pledges where that package improves enforcement or blocks structural leakage.
Cash dominion, blocked accounts, or other cash-control terms are negotiated when the risk profile requires tighter lender visibility.

Capital stack and cash waterfall

A typical Hadto venture uses three published layers: senior secured debt at the top, a contractually subordinated community participation layer in the middle, and operator common equity at the bottom.
Senior debt has first claim on collateral and first cash priority under the payment waterfall.
The community instrument stays junior by document and by payment waterfall, with payment blocks under credit stress and no ordinary operating vote unless its own documents say otherwise.
Operator common equity takes first loss, and distributions to junior layers stop when senior covenants, payment tests, or other blockers are not met.

Underwriting focus

Revenue durability, including customer contracts, renewal behavior, and how much cash flow depends on a small number of accounts.
Customer concentration, churn, and gross-margin stability under a downside case rather than a base-case growth story.
Working-capital conversion, receivables quality, and how quickly operating cash can move from invoicing to debt service.
Coverage under stress, including the minimum viable debt service coverage or fixed-charge coverage level for the actual business model.
Operator dependence, staffing continuity, and how quickly lender oversight has to intensify if the operator departs or performance slips.

Downside protections

Minimum liquidity, debt service coverage or fixed-charge coverage, leverage, borrowing-base, and junior payment blockers where those tests fit the asset base.
Defaults and remedies are called directly: payment default, covenant breach, reporting default, fraud, tax liens, operator change, and collateral impairment each have documented consequences.
Those consequences can include blocked junior distributions, tighter reporting, cash sweeps, dominion over accounts, lender consultation rights, and collateral enforcement according to the credit documents.
Workout control shifts only after negotiated defaults or breaches. Ordinary operating control does not stay vague under stress.

Reporting cadence

Monthly financial reporting within 20 calendar days of month-end so the lender can track covenant compliance, operating cash, debt service coverage, and budget variance early.
Quarterly management updates covering customer concentration, pipeline quality, staffing changes, and forward liquidity so deterioration shows up before a payment default.
Annual external financial package at the level required by the credit agreement for third-party verification.
Prompt material-event notice for litigation, tax issues, fraud concerns, payment default, operator departure, or collateral impairment so the lender can escalate quickly.

Out of scope for this credit profile

No unsecured growth lending built on speculative software multiples, token-market upside, or a story about a future exit.
No structural ambiguity between senior debt, the community layer, and operator common equity.
No governance rights hidden inside junior instruments that can interfere with senior remedies or payment priority.
No repayment case that depends on speculative exit multiples instead of documentable cash flow, collateral, or a defined takeout path.

Start with the downside case

The first diligence conversation should cover collateral, coverage, payment priority, reporting, and workout clarity before anyone talks about story.

Use the core structure pages to test that senior priority, junior rights, and operator control are not being mixed together.

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