Capital Stack Planning in Chicago, IL
At Chicago Premier Business Loan Solutions, we specialize in capital stack planning and capital stack strategy, helping Chicago businesses with equity and debt structuring to secure the right funding mix. Our services also include investment capital planning, financial structuring for projects, mezzanine financing planning, senior and subordinate debt strategy, real estate capital stack, business capital structure planning, private equity capital planning, and capital funding strategy support. With U.S. debt markets representing 76.8% of total corporate financing, expert guidance is essential to optimize financing, reduce costs, and maintain growth flexibility.
Understanding how to structure your capital stack can be complex, but we make it easier by tailoring solutions to your specific needs and the Chicago market. We know that having the right balance of debt and equity is key to managing risk and maximizing business potential, which is why we focus on clear planning to support your long-term goals and help you make smart financial decisions.
Key Components of the Capital Stack
In capital stack planning, each layer of financing has a specific role, cost, and level of risk. Understanding how these pieces fit together helps us create a strong financial structure for projects and investments.
Senior Debt
Senior debt is the first layer in the capital stack. It has the highest priority for repayment if the project faces financial trouble. Because of this, it usually carries the lowest interest rates.
Typically, senior debt is secured by assets like property or equipment. This security lowers risk for lenders and makes it easier to get large loan amounts.
We focus on senior debt to cover the major costs of your project, such as land acquisition or building construction. It helps maintain steady cash flow by having fixed payment schedules.
Mezzanine Financing
Mezzanine financing sits between senior debt and equity. It is riskier than senior debt and therefore has higher interest rates. It often includes rights to convert to equity if payments are missed.
This form of financing is useful when additional capital is needed but strict borrowing limits have been reached. It usually does not require immediate cash payments, which can ease cash flow pressures.
We use mezzanine financing to fill funding gaps while balancing risk and control. It gives us flexibility to secure extra funds without diluting ownership too early.

Preferred Equity
Preferred equity is a type of ownership with priority over common equity for dividends and asset claims. Investors get fixed dividends before common shareholders, but often without voting rights.
It sits below mezzanine debt in the capital stack but ahead of common equity in terms of payment priority. This makes it less risky than common equity but riskier than debt.
Preferred equity is beneficial when we want investment with steady returns but keep control of the company. It’s a common choice for investors seeking moderate risk and steady income.

Common Equity
Common equity is the ownership layer at the bottom of the capital stack. Common shareholders have voting rights but are last in line for dividends or repayment.
This is the riskiest part because returns depend entirely on the profitability of the project or company. However, common equity also offers the highest potential rewards.
We use common equity as the foundation for ownership and long-term growth. It aligns incentives between owners and the project's success but requires careful planning to manage risk.
Strategic Planning Process
We focus on understanding your business goals, financial needs, and market conditions. Our process involves careful review and customized planning to align your capital structure with your growth plans while controlling financial risks.
Assessment and Needs Analysis
We begin by analyzing your current financial position and future funding needs in detail. This includes reviewing existing debt, equity, and cash flow. We evaluate your business goals and the timeline for capital requirements. Our team looks at market conditions and industry benchmarks to ensure your needs match realistic funding options.
This step helps us identify gaps or excesses in your current capital stack. We prioritize clarity on how much capital you need and when, so we can build a strategy that fits your cash flow and growth.
Custom Structure Development
After assessment, we design a tailored capital stack combining debt and equity. We consider factors like interest rates, repayment terms, and investor expectations. Our goal is to balance short-term liquidity with long-term growth potential. We create a mix that maintains control over business decisions while ensuring enough capital is available for expansion.
We use models and scenario planning to test how different structures affect your financial health. This allows us to recommend the most efficient and flexible options to support your specific goals.
Risk Mitigation Strategies
We identify risks that could affect your capital plan, such as market fluctuations or changes in interest rates. Our approach includes methods to reduce these risks before they impact your business.
We advise on diversification of funding sources to avoid over-reliance on one type. We also create contingency plans in case of cash flow shortages. Our strategies include clear debt covenants and exit plans to protect your assets. We aim to keep your capital stack resilient against financial stress.
Benefits of Professional Capital Stack Planning
Enhanced Financing Flexibility
We gain more control over funding choices by planning the capital stack carefully. This allows us to use different types of loans and investments that match the project’s needs.
For example, blending senior debt with mezzanine financing or preferred equity gives us multiple paths for growth. We can adjust our financing tools based on market changes or project demands without being locked into one option.
This flexibility also helps us manage risks. Having varied funding sources spreads out the financial burden and gives us options when cash flow changes.
Optimized Cost of Capital
By structuring the capital stack wisely, we can lower the cost of borrowing or raising funds. We identify the right balance between cheaper debt and more expensive equity to reduce overall expenses.
We analyze interest rates, repayment terms, and equity demands to find affordable and sustainable financing. When costs stay low, profits improve, and projects become more viable.
This planning avoids overpaying for capital or diluting ownership unnecessarily. It ensures each dollar invested works efficiently to support business goals.
Strengthened Investor Confidence
A well-designed capital stack shows investors we understand risk and return. This builds their trust because they see clear priorities on who gets paid first and how risks are controlled.
We provide investors with transparency through detailed agreements and structured layers. This lowers their concerns about losing money or delays in returns.
Higher investor confidence can lead to easier access to funds and potentially better terms. Strong relationships with investors also support future fundraising efforts.