Every capital raise — a self-storage development, a hotel, a gas station and c-store, a rural food-processing plant, or an operating business acquisition — eventually arrives at two questions: how much funding will come from lenders, and how much must come from equity? Once equity is required, whose money will it be, on what terms, and documented how? This guide explains the capital stack, selected federal loan-program requirements, offering documents, and the analytical reports that can support a financing discussion.
Scope: Wert-Berater, Inc. provides independent feasibility studies and related analytical services. It does not arrange, broker, or place debt or equity, recommend investments, or provide legal, tax, securities, or investment advice. This article is educational, not an offering or a financing commitment. Engage qualified counsel and confirm transaction-specific requirements with your lender and agency.
01Debt, Equity, and the Capital Stack
Project capital is often described as a “stack.” Senior secured debt generally has priority over junior debt and equity, subject to its security, intercreditor agreements, and applicable law. Mezzanine debt or preferred equity may sit between senior financing and common equity. Preferred equity remains equity; it is not simply another secured loan. Common equity generally bears losses before senior claims and participates in the residual upside.
Lenders consider cost, value, cash flow, collateral, and repayment capacity. If available debt falls short of eligible project costs, the sponsor needs another permitted funding source. A government guarantee protects a lender under program conditions; it does not remove the borrower’s repayment obligation or guarantee a lower equity requirement. More debt can also increase cash-flow risk. Model the proposed sources and uses rather than assuming that minimum equity produces the best structure.
02SBA, USDA, and EXIM: Different Equity and Underwriting Rules
These are distinct programs, not interchangeable ways to obtain a universal down payment. The percentages below have different denominators and conditions.
SBA 504 — owner-occupied real estate and major fixed assets
A familiar 504 structure combines approximately 50% third-party lender financing, 40% CDC/SBA debenture financing, and 10% borrower contribution. It is an illustration, not an entitlement. Under 13 CFR 120.910, the minimum borrower contribution is 10% of project cost excluding administrative costs in the ordinary case; 15% when the borrower or applicable operating company has operated for two years or less, or when the project involves a limited or single-purpose building; and 20% when both conditions apply. The CDC must confirm the classification, eligible contribution, financing limits, occupancy, and other eligibility rules.
A minimum contribution does not establish approval, the final loan amount, or the amount of additional reserves a lender may require. A third-party report must address the actual assignment; a feasibility study does not replace a required appraisal or other lender analysis.
SBA 7(a) — acquisitions and other eligible business purposes
Do not apply one acquisition rule to every 7(a) loan. Under Appendix 15 of the inspected SOP 50 10 8.1, an Initial Acquisition has a 10% minimum equity injection that cannot be reduced or eliminated. The acquisition calculation uses total project cost as defined there, not simply the loan amount. Business Expansion and Owner Buyout transactions have conditional reduction or elimination provisions; Owner Buyouts use the business purchase price, and specified ESOP transactions have an exception. Start-ups and other uses require their own applicable underwriting analysis.
Appendix 15 groups standby debt, seller debt, and qualifying non-controlling minority equity as limited injection sources; together they may supply no more than half of the required injection. Seller debt counted for that purpose must be subordinated and on full standby — no principal or interest payments during the 7(a) loan term. Thus, where a 10% injection applies, 5% of the relevant cost base is the combined limited-source ceiling, not an extra allowance for each source. Valuation shortfalls and other conditions can require additional equity.
Important for outside investors: the inspected Appendix 15 also restricts distributions on equity used to satisfy the required injection, other than distributions solely for attributable tax obligations, until the 7(a) loan is paid off. A generic preferred-return waterfall may therefore conflict with the proposed financing. Have the lender and counsel resolve ownership, control, guarantees, injection sources, and permitted distributions before offering interests.
USDA Business & Industry under OneRD
The current 7 CFR 5001.105(d) provides several capital tests. It is not a universal “10% existing / 20% start-up tangible-equity” rule. Requirements apply at guaranteed-loan closing, and the closing balance sheet must reflect the debt and use of proceeds:
- Existing businesses: alternatives include 10% balance-sheet equity, 10% investment of eligible project costs, or the specified owner-contributed-capital test against net fixed assets plus depreciation.
- Qualifying new businesses with sales contracts: 10% balance-sheet equity or 10% project investment may apply when contract proceeds cover debt service, contract terms cover the guaranteed-loan term, and the Agency accepts counterparty creditworthiness.
- New construction businesses seeking the guarantee before completion: 25% balance-sheet equity or 25% eligible-project-cost investment.
- Other new businesses: 20% balance-sheet equity or 25% eligible-project-cost investment.
The regulation specifies permissible funds, treatment of subordinated debt, and Agency increases or reductions. Appraisal surplus and bargain-purchase gains cannot be counted as equity. These alternatives use different bases; the lender and Agency must establish which applies rather than selecting the lowest percentage in isolation.
Under 7 CFR 5001.306(a)(3)(i), a B&I guaranteed loan greater than $1 million to a new business requires a feasibility study by an independent qualified consultant acceptable to the Agency, with scope determined by the Agency. Other projects may require a study when existing analysis is insufficient, including under 5001.303(c)(4). Do not transfer this trigger to every USDA program: REAP, Community Facilities, and grant programs have their own requirements.
EXIM — export-related working capital
EXIM’s Working Capital Loan Guarantee describes a 90% guarantee to the lender and an expanded borrowing base for eligible export-related activity. It can support export inputs and qualifying standby letters of credit. The 90% figure is not an equity contribution, advance rate, or borrower debt forgiveness. Availability, collateral, eligibility, and terms require lender and EXIM review; this guide does not promise a particular collateral percentage.
| Program | Selected capital rule | Report considerations |
|---|---|---|
| SBA 504 | 10%, 15%, or 20% of defined project cost, depending on business age and property use | CDC/lender confirms required valuation and other reports |
| SBA 7(a) acquisition | Initial Acquisition: 10%; other transaction categories have conditions and exceptions | Appendix 15 valuation and, where applicable, earnings analysis are not replaced by a feasibility study |
| USDA B&I | Alternative balance-sheet or project-investment tests; new-business categories differ | Independent study required for new-business guaranteed loans over $1 million |
| Other USDA programs | Program-specific; do not reuse the B&I percentages | Confirm applicable technical, feasibility, and application requirements |
| EXIM working capital | 90% lender guarantee is not an equity percentage | Export eligibility and lender underwriting |
| Conventional financing | Lender- and transaction-specific | Scope depends on collateral, project risk, and credit requirements |
03Institutional vs. Private Capital: Trade-offs
Friends, family, high-net-worth investors, family offices, funds, and institutional allocators can have very different check sizes and decision processes. These categories overlap: a family office may negotiate like an institution, and a relationship investor may demand extensive protections. Neither speed nor sponsor control follows automatically from the label.
Relationship-based capital can offer flexibility, but many smaller investments can create substantial communication and administration work. Personal familiarity does not replace securities-law compliance, suitability of the structure, or candid disclosure of risk. Including non-accredited purchasers under Rule 506(b) adds specific conditions.
Institutional capital may support larger commitments and repeat transactions, but can require detailed diligence, governance rights, reporting, and negotiated economics. Compare the entire agreement — dilution, consent rights, fees, distribution priority, capital calls, and exit rights — rather than the headline amount offered.
04Regulation D: Rule 506(b) vs. Rule 506(c)
Rule 506 provides two commonly used exemptions from federal securities registration. Neither is an SEC approval of the investment, and this summary is not a compliance checklist. Counsel should address investor qualification, disclosure, offering integration, resale restrictions, disqualification rules, filings, and state requirements.
| Issue | Rule 506(b) | Rule 506(c) |
|---|---|---|
| General solicitation | Prohibited. A pre-existing substantive relationship is one way to demonstrate its absence, not an express universal relationship requirement. | Permitted, subject to the exemption’s other conditions |
| Purchasers | Unlimited accredited investors; no more than 35 counted non-accredited purchasers in any 90-calendar-day period, with required sophistication and information | All purchasers must be accredited investors |
| Accredited status | The issuer needs a reasonable belief; a checked box is not automatically sufficient | The issuer must take reasonable steps to verify accredited status |
| Federal notice | Form D, generally within 15 calendar days after first sale | Form D, generally within 15 calendar days after first sale |
Whether a communication is general solicitation is fact-specific. An unrestricted “invest with us” page can create a problem under 506(b), but qualifying demo-day communications have specific exceptions. Do not assume that deleting a post or switching to 506(c) automatically cures earlier conduct. Have securities counsel approve the offering approach before marketing. Anti-fraud obligations remain even where prescribed disclosures to accredited investors are not required.
05The Documents to Discuss with Counsel
The package depends on the exemption, entity, investors, and transaction. Common documents include:
Private Placement Memorandum (PPM) or other offering disclosure. Describes the project, offering terms, use of proceeds, sponsor, material risks, fees, conflicts, and distributions. A document titled “PPM” is not universally mandated for every accredited-only offering; accurate disclosure and applicable information requirements still matter. A PPM does not eliminate liability or make an investment safe.
Operating Agreement or Limited Partnership Agreement. Sets governance and economic rights, including capital calls, voting, transfer restrictions, distributions, and removal provisions.
Subscription Agreement. Records the investment commitment, representations, and acceptance mechanics. Counsel should determine when a binding commitment constitutes the first sale for filing purposes.
Form D and state notices. Rule 503 generally requires Form D no later than 15 calendar days after first sale, with the stated weekend/holiday adjustment and subsequent amendment requirements. State notice requirements are separate. Filing is not regulatory endorsement.
Business plan, projections, and supporting studies. Provide an analytical basis for the proposed business, capital requirements, and risks. A feasibility study does not substitute for counsel’s disclosures, a required valuation, a Quality of Earnings report, or the lender’s credit decision. Reconcile the model with the legal documents and confirm authorized reliance.
06How Operating Agreements Work
An LLC operating agreement defines the members’ contractual relationship within the governing law. Have counsel explain at least five areas:
Management and control. Identify the manager’s authority and which decisions require consent, such as a sale, refinance, new borrowing, or admission of members.
Capital contributions and calls. State commitments, funding dates, and remedies for a missed contribution. Dilution is one possible negotiated remedy, not an automatic rule. Tax capital accounts, cash invested, and unreturned capital for the waterfall may differ.
Distributions. Define available cash, reserves, priorities, fees, preferred return, catch-up, promote, and treatment of operating versus sale proceeds. Financing covenants can restrict distributions even if the agreement otherwise permits them.
Transfers and exits. Address consent, rights of first refusal, buyouts, withdrawal, dissolution, and other restrictions. Private interests can be difficult to sell.
Reporting, removal, and duties. Specify access to information, reporting cadence, conflicts, and manager-removal rights. Fiduciary duties depend on jurisdiction, role, and agreement: for example, Delaware §18-1101(c) permits an LLC agreement to expand, restrict, or eliminate duties, including fiduciary duties, but not the implied contractual covenant of good faith and fair dealing. Do not generalize that rule to every state or relationship.
07Equity Waterfalls: Preferred Return, Catch-up, and Promote
A distribution waterfall allocates available cash according to the governing agreement. There is no universal order: some agreements prioritize a preferred return before return of capital, distinguish operating and disposition proceeds, or use multiple hurdles. A preferred return is a distribution priority, not a guaranteed yield or necessarily a debt obligation.
Return of capital reduces the contractual unreturned-capital balance. Preferred return may accrue on a specified base and may be simple or compounding. A catch-up, if included, allocates subsequent distributions toward the sponsor’s negotiated share. A promote gives the sponsor a specified participation under the agreement; thresholds, calculation periods, fees, and clawbacks can materially change outcomes.
Illustrative residual split — not a return forecast
Assume capital and an agreed preferred return have already been paid, no catch-up applies, and exactly $5,000,000 remains available for an 80/20 residual split. This example does not calculate a preferred return or IRR.
Deal-by-deal (“American”) and whole-fund (“European”) describe broad distribution approaches, not complete contracts. Timing, reserves, loss carryforwards, escrow, and clawbacks determine the actual result. Model the written terms rather than assuming that a label establishes investor protection.
For LP net IRR, identify the investor, dated contributions and distributions, fees, and promote basis. Keep project-level, levered-equity, and investor-net returns distinct. Equal IRRs do not, by themselves, prove a modeling error; different measures can coincide in particular cases. Multiple sign changes can produce ambiguous IRRs, and some cash flows have no meaningful IRR. Report cash flows and limitations alongside the metric.
08What Raising Equity Costs
Budget separately for formation, offering, placement, and ongoing administration. This guide does not quote market-wide fee ranges or Wert-Berater prices; obtain written scope and fee proposals.
Formation and offering: counsel, entity formation, drafting, disclosure work, accounting, and due diligence. Costs depend on complexity, jurisdictions, investor mix, and work already completed.
Placement: an appropriately authorized intermediary may charge negotiated fees. For arithmetic only, a hypothetical 3% fee on $5 million raised would be $150,000; this is not a fee quote or recommendation. Transaction-based compensation can raise broker-registration issues. Ask securities counsel to assess the intermediary and compensation structure before agreeing to pay a finder or placement agent. Wert-Berater does not place capital.
Ongoing: administration, investor reporting, tax returns, applicable K-1 preparation, state notices, and any separately engaged monitoring. For partnerships, syndication costs and organizational costs have different tax treatment under Treasury Regulation 1.709-1. Do not assume every offering expense is currently deductible or amortizable; obtain tax advice.
08ACost of Capital by Industry: U.S. WACC Benchmarks
The cost of raising capital includes more than the legal, advisory and placement expenses above. Investors also require a return on the money they provide. Weighted average cost of capital (WACC) combines the required return on equity and the after-tax cost of debt, weighted by their share of capital. It is different from the cost of equity alone.
Source: Aswath Damodaran, NYU Stern — Cost of Equity and Capital (US). Data as of January 2026; retrieved 2026-10-07. This is a dated snapshot, not a live rate feed. Values below are reproduced at the source’s displayed precision, not recalculated.
How to read the table: these U.S. industry estimates are reference points for comparison, not a loan quote, a promised investor return, or a recommended discount rate for a particular project. An early-stage venture, private company or single-property development can have a substantially different risk profile and capital structure from listed companies in its industry. Financial-sector rows also require particular care because debt plays a different operating role.
94 industries · January 2026
Scroll within the table to see every industry and column. Debt share is D/(D+E); the remaining share is equity.
| Industry | WACC | Cost of equity | After-tax cost of debt | Debt share of capital | Number of firms |
|---|---|---|---|---|---|
| Advertising | 7.81% | 9.35% | 3.97% | 28.67% | 52 |
| Aerospace/Defense | 7.60% | 8.17% | 3.97% | 13.47% | 79 |
| Air Transport | 6.72% | 9.24% | 3.97% | 47.69% | 23 |
| Apparel | 7.13% | 8.12% | 3.97% | 23.83% | 35 |
| Auto & Truck | 9.38% | 10.45% | 3.97% | 16.45% | 33 |
| Auto Parts | 8.18% | 9.92% | 3.97% | 29.31% | 35 |
| Bank (Money Center) | 4.98% | 7.34% | 3.55% | 62.15% | 15 |
| Banks (Regional) | 4.98% | 5.73% | 3.55% | 34.25% | 568 |
| Beverage (Alcoholic) | 6.48% | 7.57% | 3.97% | 30.24% | 14 |
| Beverage (Soft) | 6.33% | 6.81% | 3.97% | 17.07% | 27 |
| Broadcasting | 5.09% | 6.05% | 3.97% | 46.19% | 24 |
| Brokerage & Investment Banking | 6.08% | 9.17% | 3.80% | 57.55% | 32 |
| Building Materials | 7.85% | 8.91% | 3.80% | 20.63% | 41 |
| Business & Consumer Services | 7.23% | 7.91% | 3.80% | 16.47% | 155 |
| Cable TV | 5.20% | 7.25% | 3.80% | 59.50% | 9 |
| Chemical (Basic) | 6.22% | 8.46% | 3.97% | 49.84% | 29 |
| Chemical (Diversified) | 5.23% | 7.74% | 3.80% | 63.78% | 4 |
| Chemical (Specialty) | 7.25% | 8.28% | 3.80% | 23.01% | 59 |
| Coal & Related Energy | 8.41% | 8.73% | 3.97% | 6.67% | 16 |
| Computer Services | 7.83% | 8.80% | 3.97% | 20.06% | 64 |
| Computers/Peripherals | 9.71% | 9.97% | 3.97% | 4.42% | 36 |
| Construction Supplies | 8.29% | 9.08% | 3.80% | 14.98% | 40 |
| Diversified | 7.30% | 7.88% | 3.55% | 13.46% | 20 |
| Drugs (Biotechnology) | 8.49% | 9.01% | 4.51% | 11.54% | 496 |
| Drugs (Pharmaceutical) | 7.85% | 8.33% | 4.51% | 12.69% | 228 |
| Education | 6.75% | 7.43% | 3.97% | 19.60% | 32 |
| Electrical Equipment | 8.99% | 9.53% | 4.51% | 10.72% | 112 |
| Electronics (Consumer & Office) | 7.63% | 7.81% | 4.51% | 5.49% | 8 |
| Electronics (General) | 7.85% | 8.28% | 3.97% | 9.92% | 114 |
| Engineering/Construction | 8.69% | 9.35% | 3.97% | 12.29% | 48 |
| Entertainment | 7.13% | 7.63% | 3.97% | 13.73% | 92 |
| Environmental & Waste Services | 7.43% | 8.17% | 3.97% | 17.66% | 53 |
| Farming/Agriculture | 7.27% | 8.99% | 3.97% | 34.14% | 35 |
| Financial Svcs. (Non-bank & Insurance) | 5.00% | 8.27% | 3.80% | 73.13% | 176 |
| Food Processing | 5.79% | 6.66% | 3.80% | 30.43% | 78 |
| Food Wholesalers | 6.53% | 7.82% | 3.80% | 31.96% | 13 |
| Furn/Home Furnishings | 6.53% | 7.62% | 3.97% | 29.74% | 27 |
| Green & Renewable Energy | 6.04% | 7.77% | 4.51% | 53.08% | 15 |
| Healthcare Products | 7.54% | 8.00% | 3.97% | 11.34% | 204 |
| Healthcare Support Services | 6.83% | 7.84% | 3.97% | 26.16% | 104 |
| Heathcare Information and Technology | 8.22% | 8.89% | 3.97% | 13.60% | 115 |
| Homebuilding | 7.27% | 8.01% | 3.80% | 17.59% | 30 |
| Hospitals/Healthcare Facilities | 6.19% | 7.52% | 3.97% | 37.47% | 31 |
| Hotel/Gaming | 7.36% | 8.77% | 3.80% | 28.44% | 63 |
| Household Products | 7.03% | 7.59% | 3.97% | 15.36% | 110 |
| Information Services | 7.00% | 8.06% | 3.80% | 24.91% | 15 |
| Insurance (General) | 6.34% | 6.95% | 3.97% | 20.40% | 21 |
| Insurance (Life) | 5.60% | 6.82% | 3.80% | 40.42% | 20 |
| Insurance (Prop/Cas.) | 5.78% | 6.11% | 3.55% | 12.91% | 57 |
| Investments & Asset Management | 6.13% | 6.89% | 3.80% | 24.64% | 283 |
| Machinery | 7.70% | 8.25% | 3.97% | 12.81% | 105 |
| Metals & Mining | 8.20% | 8.60% | 4.51% | 9.90% | 73 |
| Office Equipment & Services | 7.92% | 9.90% | 3.80% | 32.48% | 14 |
| Oil/Gas (Integrated) | 5.07% | 5.29% | 3.55% | 12.16% | 4 |
| Oil/Gas (Production and Exploration) | 6.25% | 7.17% | 3.80% | 27.32% | 142 |
| Oil/Gas Distribution | 5.78% | 6.93% | 3.80% | 36.92% | 23 |
| Oilfield Svcs/Equip. | 7.04% | 8.19% | 3.97% | 27.20% | 97 |
| Packaging & Container | 6.75% | 8.51% | 3.55% | 35.53% | 19 |
| Paper/Forest Products | 6.93% | 8.22% | 3.97% | 30.40% | 6 |
| Power | 5.01% | 6.10% | 3.55% | 42.58% | 46 |
| Precious Metals | 7.47% | 7.68% | 4.51% | 6.79% | 56 |
| Publishing & Newspapers | 5.95% | 6.46% | 3.80% | 19.32% | 19 |
| R.E.I.T. | 5.32% | 6.81% | 3.55% | 45.79% | 190 |
| Real Estate (Development) | 5.82% | 7.71% | 3.97% | 50.45% | 14 |
| Real Estate (General/Diversified) | 6.25% | 7.56% | 3.80% | 34.88% | 12 |
| Real Estate (Operations & Services) | 7.41% | 8.26% | 3.97% | 19.77% | 54 |
| Recreation | 6.76% | 8.51% | 3.97% | 38.65% | 49 |
| Reinsurance | 5.64% | 6.54% | 3.55% | 30.30% | 1 |
| Restaurant/Dining | 7.16% | 8.07% | 3.80% | 21.40% | 64 |
| Retail (Automotive) | 6.78% | 8.12% | 3.80% | 31.20% | 34 |
| Retail (Building Supply) | 9.51% | 10.80% | 3.97% | 18.89% | 14 |
| Retail (Distributors) | 7.22% | 8.18% | 3.80% | 22.02% | 62 |
| Retail (General) | 7.27% | 7.54% | 3.80% | 7.36% | 23 |
| Retail (Grocery and Food) | 7.24% | 8.94% | 3.97% | 34.19% | 15 |
| Retail (REITs) | 5.57% | 6.72% | 3.55% | 36.07% | 26 |
| Retail (Special Lines) | 8.01% | 8.81% | 3.97% | 16.50% | 94 |
| Rubber& Tires | 4.48% | 6.31% | 3.97% | 78.19% | 3 |
| Semiconductor | 10.55% | 10.72% | 3.97% | 2.53% | 66 |
| Semiconductor Equip | 9.89% | 10.18% | 3.97% | 4.64% | 31 |
| Shipbuilding & Marine | 6.69% | 7.31% | 3.97% | 18.40% | 8 |
| Shoe | 8.01% | 8.49% | 3.97% | 10.67% | 11 |
| Software (Entertainment) | 8.44% | 8.54% | 3.97% | 2.00% | 77 |
| Software (Internet) | 10.66% | 11.48% | 3.97% | 10.95% | 29 |
| Software (System & Application) | 9.34% | 9.64% | 3.97% | 5.28% | 309 |
| Steel | 7.76% | 8.69% | 3.80% | 19.04% | 19 |
| Telecom (Wireless) | 5.48% | 6.35% | 3.80% | 34.19% | 12 |
| Telecom. Equipment | 7.72% | 8.07% | 3.97% | 8.44% | 57 |
| Telecom. Services | 5.39% | 6.75% | 3.97% | 49.00% | 39 |
| Tobacco | 6.94% | 7.49% | 4.51% | 18.68% | 10 |
| Transportation | 6.72% | 7.79% | 3.80% | 26.71% | 19 |
| Transportation (Railroads) | 7.27% | 8.30% | 3.55% | 21.75% | 4 |
| Trucking | 7.52% | 8.46% | 3.80% | 20.15% | 26 |
| Utility (General) | 4.36% | 5.02% | 3.55% | 44.90% | 14 |
| Utility (Water) | 4.93% | 5.79% | 3.55% | 38.41% | 14 |
No industries match your search. Try a broader term or reset the table.
Using the benchmark in a financial model: select a genuinely comparable industry, document the valuation date, and assess the project’s stage, leverage, geography, cash-flow risk and ability to use tax deductions. For a conventional enterprise valuation, match WACC with unlevered cash flows to the firm; use an appropriate cost of equity for cash flows available only to equity holders. An investor’s preferred return or distribution waterfall is not automatically the project’s WACC.
Wert-Berater can help document and test these assumptions within the agreed financial-modeling or feasibility-study scope, then compare actual performance with the model through contracted monitoring and reporting. The work does not guarantee financing or investment returns.
Industry labels and firm counts follow the source. Refer to Damodaran’s original table for beta, pre-tax debt costs, the remaining inputs, the downloadable spreadsheet and any later updates.
09Do You Need a Feasibility Study?
Start with the program and the actual transaction. The USDA B&I new-business trigger described above is specific. SBA requirements depend on the applicable SOP, loan type, use of proceeds, and lender analysis. Do not infer a blanket independent-study requirement from a special-purpose property label alone. EXIM working-capital underwriting is a separate process.
A feasibility study evaluates defined questions about market demand, technical and operating matters, management, financial feasibility, and risk within its scope. An appraisal estimates value under its assignment. Environmental, engineering, valuation, and earnings reports answer other questions. None alone determines that a project should be financed.
Equity investors may seek independent analysis even without a specific agency mandate. Agree on intended users, assumptions, limitations, access to evidence, and reliance rights before including a report in offering materials. An independent opinion supports due diligence; it does not certify an offering, guarantee lender acceptance, or predict investment success.
10How Wert-Berater Supports Project Evaluation
Wert-Berater’s role is analytical, with services defined by the engagement. Independence means conclusions should follow the evidence rather than a requested financing outcome. It is not a blanket claim of fiduciary status to every lender, agency, borrower, or investor. Duties, permitted reliance, and conflicts must be addressed for the particular assignment. Findings may change when new evidence warrants revision.
Independent studies. The agreed scope establishes the questions, evidence, methods, limitations, and deliverables. The report is not a promise that every fact is independently verified or that a lender or agency will accept the project.
Financial modeling. Where included, modeling connects identified project costs, revenue, expenses, financing, and cash flows. Inputs can include sourced observations and explicitly labeled assumptions or estimates. A model necessarily contains input values; “zero hardcoded numbers” is not an appropriate quality promise. Formula links, sensitivity cases, and output formats depend on the commissioned work and should be checked against the agreed scope.
Asset and portfolio performance monitoring. Where separately engaged, monitoring can compare supplied actual results with the agreed budget or underwriting and report variances, debt coverage, milestones, and risks. Frequency, metrics, review responsibilities, data requirements, authorized recipients, and formats must be specified. It is not continuous surveillance, an audit, automatic detection of every issue, or a guarantee of returns. Missing or unverified data must be identified, not presented as measured performance.
Investor-specific waterfalls, net returns, and interpretation of negotiated economics require an expressly agreed analytical scope and supplied terms. Do not infer that every capability illustrated or discussed here is included in every monitoring engagement. The governing agreements and qualified advisers control legal rights; the firm provides decision support, not discretionary investment management.
Define the analysis your project needs
Discuss an independent study, a documented model, or separately scoped performance monitoring. Confirm deliverables, information needs, timing, and fees before work begins.
Explore Asset & Portfolio Monitoring Request a Fee Quote Schedule a Conversation11Frequently Asked Questions
How do you raise equity for a business or real estate project?
Define the project and capital needs, obtain legal advice on the entity and offering, prepare suitable disclosure and supporting analysis, and seek commitments using a lawful offering process. Ownership and distributions follow the governing agreements. No report or model guarantees funding.
What is the difference between Rule 506(b) and Rule 506(c)?
Rule 506(b) prohibits general solicitation and permits accredited purchasers plus a limited number of sophisticated non-accredited purchasers under specific conditions. A pre-existing substantive relationship is one way to avoid general solicitation, not a universal express requirement. Rule 506(c) permits general solicitation, but all purchasers must be accredited and the issuer must take reasonable steps to verify that status. Counsel should review all applicable conditions.
How does an equity waterfall work?
It allocates available cash using the agreement’s priorities, preferred-return terms, catch-up, and residual splits. There is no universal tier order or guaranteed preferred return. The $5 million example above illustrates only a residual 80/20 split after earlier tiers have been paid.
Do I need a feasibility study for an SBA, USDA, or EXIM-supported loan?
The answer depends on the program and transaction. Under 7 CFR 5001.306(a)(3)(i), B&I guaranteed loans greater than $1 million to a new business require an independent qualified consultant’s study acceptable to the Agency. Other agency and lender requirements must be checked separately. A feasibility study does not replace required valuations or other due diligence.
What does it cost to raise equity?
Request transaction-specific proposals for legal, accounting, diligence, authorized placement, administration, and reporting work. No market-wide fee range or firm price is quoted here. The hypothetical 3% fee calculation is arithmetic only, not a quote or recommended compensation arrangement.
What can independent reports and monitoring establish?
They can organize evidence, test assumptions, and compare reported performance with an agreed baseline within the engagement scope. They do not guarantee accuracy of all supplied data, regulatory acceptance, financing, or investor returns. Monitoring cadence, metrics, and delivery formats must be agreed.
12Sources and Review Limits
Primary-source text checked October 7, 2026. This is a source-check date, not a publication date or professional approval. Requirements may change; confirm the rules applicable to your transaction. The January 2026 WACC snapshot has its own source and limitations above.
- SBA — SOP 50 10 source portal; inspected edition: 8.1 with Technical Policy Updates, effective October 1, 2026, including Appendix 15.
- SBA — Information Notice 5000-882227, September 25, 2026: applicable edition and application-receipt trigger.
- 13 CFR 120.910: 504 borrower contributions.
- 7 CFR 5001.105(d): B&I capital/equity alternatives; 5001.303 and 5001.306: application and feasibility-study requirements.
- EXIM — Working Capital Loan Guarantee: purpose and 90% lender guarantee.
- 17 CFR 230.501, 230.502, 230.503, and 230.506: investor definitions, conditions, Form D, and Rule 506.
- SEC — General Solicitation: relationship and qualifying demo-day discussion; Guide to Broker-Dealer Registration: finders and compensation considerations.
- Delaware — 6 Del. C. §18-1101(c)–(e): contractual treatment of LLC duties; a state-specific example, not a national rule.
- 26 CFR 1.709-1: partnership organizational and syndication costs.
Waterfall amounts are hypothetical arithmetic, not market-return benchmarks. Firm service descriptions require engagement-specific confirmation; public sources cannot establish a private assignment’s scope or professional duties.
Disclaimer & scope. General education only; not legal, tax, accounting, securities, investment, or financial advice, and not an offer or solicitation of a security. Wert-Berater does not arrange, broker, or place debt or equity. No agency approval, financing, return, fiduciary status, or universal service capability is promised. Consult qualified counsel, your accountant, and your lender or program officer. AI-generated imagery and narration are illustrative; the monitoring screen shows hypothetical sample data, not client results.