How $1M to $20M+ Transactions Actually Get Structured

Why We Built This

Why This Guide Exists

Most operators walking into their first $1M+ transaction have only ever borrowed one way: a term loan here, a line of credit there, one bank holding the relationship. That playbook works fine at $250K. Then a real opportunity shows up — a competitor for sale, a building you've leased for ten years, a $3M equipment line for the next phase — and the same playbook quietly fails. Not because your numbers are weak. Because the structure is wrong.

At this size, single-bank thinking costs you money. No one lender prices every asset class well — the bank that's aggressive on owner-occupied real estate rarely wants your heavy equipment, and the one that funds equipment fast won't touch goodwill in an acquisition. Hand the whole package to one institution and you overpay on at least one layer, or you hear “no” on a transaction another lender would have funded without blinking.

This guide gives you the mental model an institutional underwriter already has. The four pillars they actually score. The way capital stacks get built across specialists. And the handful of mistakes that kill more $5M+ transactions than any rate disagreement ever does. Read it in order — the model and the stacking mechanics are the foundation, and everything after is applied detail.

Bobby's Take

“The most expensive mistake I see at $1M+ is treating commercial financing like a bigger version of the loan you got at $250K. It's a different game — different underwriting, different products, different pricing. This is the conversation I've had with hundreds of operators, written down once, in order.”

— Bobby Friel, Basecamp Funding · Founder

Real Scenario

The $4.8M Acquisition

A Midwest manufacturer, eighteen years in business, gets a call: a direct competitor — same customers, complementary equipment — is retiring and willing to sell. Asking price $4.8M: a 32,000 sq ft facility, $1.4M in machinery, and roughly $700K in working capital and goodwill. The acquirer's own business already throws off enough EBITDA to service the new debt — before the acquisition contributes a dollar. The seller wants to close in sixty days.

The owner's first call is the bank that's held the checking and a $250K line for a decade. The relationship banker is supportive — and the commercial group commits to $2.4M of the $4.8M. Half. The owner has to find the rest somewhere else, on a sixty-day clock, from a lender who can't coordinate with whoever fills the gap. That's the moment this stops being a banking relationship and becomes a structuring problem.

Run the same $4.8M as a stack, and it stops being one bank's problem and becomes three specialists' opportunity. The real estate routes to a lender that prices owner-occupied property most aggressively. The machinery routes to one that funds heavy equipment in seven to fourteen days. The working capital and goodwill route to a third that's comfortable with acquisitions where existing cash flow services the debt. Each lender competes on its own layer. The owner fills out one application.

Blended down payment came in under 12%. The closing window held at 28 days — inside the seller's sixty. And the structure underwrote against the acquiring business's cash flow, not the target's — the competitor's revenue informed the valuation, but the file that got approved was the buyer's own. That's the part most operators get backwards: at this level, your business qualifies the transaction. The acquisition is what your capital is for, not what pays for it.

The Underwriting Model

The 4-Pillar Commercial Underwriting Model

At $250K, lenders lean on personal credit and revenue. At $1M+, the model shifts — personal credit still matters, but four other pillars carry the weight. Pass all four and the rest is paperwork. Fail any one of them and you're fighting the structure, no matter how strong the other three look.

This is the same model you should be running on your own transaction before a lender ever sees it. If you can describe your numbers across these four dimensions, you walk in already in the top quartile of files an underwriter reviews.

Notice what isn't on the list: rate. Rate is the output, not the input — a downstream result of how these four score. Operators who fight on rate before they've solved the four pillars are negotiating the wrong number. Win the underwriting conversation first; the rate conversation takes care of itself.

The way to put this into practice is to calculate your own DSCR before you walk into any lender conversation. Take your trailing twelve months of net operating income, divide it by the proposed annual debt service across the new structure, and write down the number. If the answer is below 1.25x, the structure needs to change — by reducing the loan amount, extending the term, or restructuring the package across multiple products with different amortization profiles.

That single calculation is the most important piece of homework you can do on a commercial transaction. It tells you whether you're entering a rate negotiation or a structuring negotiation — and those are very different conversations. The rate negotiation happens when DSCR is already strong. The structuring negotiation happens when it isn't.

The Core Mechanic

What Capital Stacking Actually Means

Every lender has a ceiling — the most it will hold against a single balance sheet. Capital stacking stops treating that ceiling as your limit. Instead of forcing your number into one lender's box, you layer the right instruments — a senior secured term loan as the base, mezzanine or subordinated debt to extend leverage past the senior ceiling, an asset-based line for working capital, equipment financing for the hard assets — into one coordinated structure. Each lender holds the piece it underwrites best. The layers add up to the number the plan actually needs.

It isn't one bigger loan. It's the right combination of them.

What it is: a coordinated structure where every lender knows about every other position, the combined debt service is built to fit your cash flow, and one desk manages the timeline so all the layers fund together. What it isn't: secret stacking — taking money from multiple sources without disclosing each position to the others. That violates covenants, gets transactions called, and ends careers. We'll come back to it in what kills $5M+ files.

A real $5M stack might look like this: a $3M commercial real estate mortgage from one lender, a $1.5M equipment line from a second that specializes in heavy machinery, and a $500K working capital facility from a third to cover integration and the first ninety days. Three lenders, three specialties, one borrower, one application, one coordinated closing. On a larger transaction, the same logic adds tiers — a senior secured facility at the base, mezzanine layered above it where the plan needs more leverage than senior debt alone will carry.

Here's why it's cheaper, not just bigger. When one bank handles the whole $5M, it prices against its weakest layer — usually the working capital piece — and the whole structure carries that cost. Split the same $5M across three specialists and each layer gets priced by a lender that wants that asset class. The blended cost across the stack is consistently lower than any single bank's all-in quote. You're not playing lenders against each other. You're putting each piece in front of the desk that reads it best.

Capital stacking only works when one party coordinates the structure. That's what the specialist on a marketplace does. Without that coordination, what you actually get is three separate loan applications, three separate underwriting cycles, three separate timelines, and three chances for one lender to back out late and sink the entire transaction. Coordination is the product. The lenders are commodities; the structuring is not.

The right place to stress-test a stack on your specific numbers is the commercial funding calculator. Model the full structure across commercial real estate, equipment, and working capital layers, and check whether the combined debt service still passes a 1.25x DSCR test. If the model doesn't pass on paper, the underwriting won't pass in committee.

It comes down to structural fit, not a bidding war. A real estate lender that prices owner-occupied buildings most aggressively does so because that asset class fits their risk model. The same lender pricing equipment usually does it conservatively, because equipment isn't their specialty. Routing each layer to the lender whose risk model fits is what produces the blended cost advantage.

The borrower's job in a stacked structure is not to assemble the lenders — it's to present the transaction cleanly enough that a specialist can route it. Strong financials, clear use of funds, and a credible debt service narrative are what make routing possible. When those pieces are in place, the marketplace process consistently produces packages that no single bank could match.

The Building Blocks

The 6 Commercial Loan Products

Almost every $1M–$20M+ transaction is built from some combination of these six instruments. You don't need all of them. You need the right ones in the right positions — which is what the four pillars and your use of funds decide.

None of these are interchangeable. Each was built for a specific layer of a structure. Get the routing right and the package looks effortless. Get it wrong and you're financing a ten-year asset on a three-year term, or waiting weeks on a transaction that needed to fund in days. Routing is the whole game.

Most $1M–$20M+ structures combine two or three of these. An acquisition usually pairs a senior term loan with an equipment line and a working capital facility. A building purchase pairs commercial real estate financing with a line for operations. The six products are the vocabulary; the stack is the sentence you build from them.

One instrument that's not on this list: merchant cash advance and factor-rate receivables products. At $1M+, those aren't commercial-tier financing. If a lender is pitching factor-rate money on a $3M structure, that's a routing failure, not a product fit. Walk away and find a specialist.

At a Glance

Side-by-Side Comparison

Every instrument in one view. Use it to compare structure at a glance, then read the deep dives above for the full picture. One thing you won't find here: rate. At this level rate isn't a published number you shop — it's an output of the four pillars, set per file. Anyone quoting you a commercial rate before they've seen your DSCR is guessing.

These are typical ranges, not hard caps. A single product's standard line runs to about the numbers below — but when revenue, cash flow, and the story support it, lenders go higher, and stacked together they're how a file reaches $20M+. The right structure is built to your file, not to a table.

Matching Products to Transaction Size

Funding by Transaction Size ($1M-$20M+)

Product fit changes with transaction size. At $1M, a single product still works. By $5M, capital stacking is the default. Above $10M, multi-lender coordination isn't a strategy — it's structurally the only way the transaction gets done.

The pattern across these four tiers is consistent. As transaction size increases, the cost of choosing one bank goes up faster than the cost of running a structured marketplace process. Below $3M, single-product is fine. Above $5M, capital stacking is almost always the economically better answer. Above $10M, it's the only structure that scales.

None of this is theoretical. Transactions in each of these tiers have closed through the Basecamp marketplace — and the specialist team can typically tell you within the first 15 minutes of an intake call which tier your transaction sits in and what the structuring conversation should look like. Start that intake at /commercial-financing.

Tax Strategy

Section 179 at Scale

If last year was strong and you're about to write a check to the IRS — stop. Acquire qualifying equipment with as little as 10% down, finance the rest, and write off the full purchase price in year one. Section 179 covers it up to the annual cap; 100% bonus depreciation — made permanent in 2025, with no cap and no income limit — carries the rest.

The mechanic that surprises operators is the interaction with financing. You don't pay cash to take the deduction. Put 10% down, finance the balance, and you still write off the full purchase price in the year the equipment goes into service. At the top bracket, that first-year deduction returns real money — and for an established business with strong cash flow, it's the difference between writing a check to the IRS and putting the same capital into your own equipment. Your CPA models the exact numbers for your bracket and structure.

More write-off than you put down. You financed the machine and put down a fraction of its price, but you deduct the full price in year one. The write-off is bigger than your down payment, and the equipment keeps working the whole time.

Read the table the right way: the column that matters most is “Net Benefit.” That's the estimated tax savings minus the cash down payment. In the $5M-profit scenario, putting $200K down on $2M of equipment produces an estimated $740K in tax savings — net benefit roughly $490K in year one, before the equipment ever produces a dollar of revenue. For an established business with strong profits, that math is the difference between writing a large check to the IRS and reinvesting in productive capacity.

The two preconditions to make this work are: the equipment must qualify under Section 179 rules, and it must be placed in service in the tax year you're trying to capture the deduction. December purchases that are still in transit on December 31 don't count. Plan the financing timeline accordingly — equipment financing closes in 7-21 days, but only if the structure is started early enough to actually take delivery before year-end.

The structural lesson from that scenario is the interaction between financing and tax strategy. The borrower preserved roughly $1.8M of working capital by financing the equipment instead of paying cash, then captured the full first-year deduction anyway. On the math, the cost of capital on the financed portion is meaningfully lower than the opportunity cost of having tied up that cash in equipment.

That's the move that gets underused. Owners with strong profits often default to paying cash for equipment because the cash is available — without modeling the alternative. Running the numbers in the equipment financing calculator takes 60 seconds and frequently flips the decision.

Bobby's Take

“I've watched operators write huge checks to the IRS when they could have acquired the equipment, written off the full price, and grown the business at the same time. That's not tax planning — that's leaving capital in federal coffers that belonged in your business.”

— Bobby Friel, Basecamp Funding · Founder

The other consideration is timing. Section 179 only captures equipment that's placed in service during the tax year. Borrowers who start the financing conversation in October are often fine. Borrowers who start in late December are usually not — equipment financing closes fast, but it doesn't close instantly, and shipping windows on heavy machinery can push delivery past year-end.

For year-end tax planning around equipment, the right time to start modeling structures is late Q3. That gives the financing process room to close, the equipment time to be delivered, and the business room to actually place the asset in service before the calendar closes. Talk to your CPA in parallel with talking to a commercial specialist — the two conversations inform each other.

Avoid These Mistakes

What Kills $5M+ Transactions

Most $5M+ transactions don't die at the rate negotiation. They die earlier — at structuring, affordability, or documentation — and the rate conversation never happens, because the file never gets that far. The operators who lose these transactions almost never see it coming. They're focused on the number while the structure quietly disqualifies them.

Every one of these is fixable. None is fatal caught early. All of them are fatal discovered mid-underwriting — when the file's already in front of a committee and the fix now looks like a red flag. Get the structure clean before you submit, not after.

Sector Focus

Industries Where Commercial Lending Is Booming

Six sectors are moving capital at scale in the $1M–$20M+ range right now, each with structural tailwinds lenders are actively pricing into their books. That doesn't mean every operator in them gets approved — it means a qualified file in these sectors draws more aggressive structuring and faster timelines than the same file in a cooler one. Lenders compete harder for the verticals they want.

The Basecamp Difference

The Marketplace Advantage at Commercial Scale

At $250K, the difference between one bank and a marketplace is mostly speed and approval odds. At $1M+, the difference becomes structural — it changes what the transaction costs and whether it closes at all. One bank prices every layer through one risk model. A marketplace puts each layer in front of the lender that competes to win it. At this size, that's not a marginal edge. It's the whole game.

The marketplace runs across a network of specialist lenders, each with the asset classes and structures it wants to hold. Your file doesn't go to all of them — it goes to the ones built for your layers. The desk reads the file, identifies who holds which piece best, and routes accordingly. You write one application; the competition happens behind it.

The economics scale with size. On a $1M structure, the marketplace edge is real but modest. On a $5M structure, the blended-cost difference between a single-bank quote and a properly stacked structure routinely runs into six figures — money that stays in the business instead of going to a lender that mispriced a layer it never wanted to hold. That gap is the entire reason this guide exists.

None of this is theoretical. Spend the time upfront getting your numbers right — the four pillars cold, the structure modeled, the file complete — and then put it in front of a desk that routes it across specialists instead of cramming it into one bank's box. That's the practical takeaway from everything above. The operators who do it walk in with offers. The ones who don't walk in with hope.

Keep Going

Continue Learning

These three guides pair with the commercial guide to give you the full funding playbook — foundational, decision-making, and industry-specific.

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