The table below illustrates the various financing sources available for ESOP transactions
| Type | Description | Term | Pricing |
| Senior debt | Debt secured by the company’s assets | 3-4 years | LIBOR + 150-350bps |
| Subordinated debt | Table | 5-7 years | 8-10% cash interest |
| Seller notes | Table | 5-10 years | 2–10% cash interest, depending on subordination, plus warrants to get to 12-14% |
| Company cash | Table | 3-20 years | AFR |
| Royalty financing | Table | 8-10 years | 5–12% cash and PIK interest and royalties to get to 18-22% IRR |
| Mezzanine debt | Unsecured, subordinated debt with an equity component | 8-10 years | 5–12% cash and PIK interest and warrants to get to 18-22% IRR |
This chart illustrates the amount of debt that is typically available to companies considering an ESOP:
