The Jenga Effect S1E11a

Commercial lending's capital stack is like a high-stakes game of Jenga where millions of dollars and panic replace wooden blocks and laughter. The structure and sequence of your funding sources must be precisely arranged for deal success, with even one misplaced element threatening the entire project.

• Capital stack includes senior debt, mezzanine debt, equity, bridge financing, grants, and tax credits
• Each funding source must fit in the right place, order, and timing
• Lenders are extremely averse to uncertainty or "wobbly" structures
• A real development deal collapsed when equity wasn't fully committed, triggering a domino effect
• Map your capital stack strategically like a military operation
• Secure documented commitments, not just verbal promises
• Never assume funding sources will adjust timelines to accommodate changes

If you've got a deal that needs a smarter structure or a client who's outgrown your credit box, Cardinal Capital can help. Connect with me on LinkedIn or visit cardinalcap.net to learn more.

For more commercial capital information, contact us at info@cardinalcap.net

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Transcript

Welcome to Capital Stack

Speaker 1 0:01

Welcome to Capital Stack , where we talk about the deals , the dollars and the details that make commercial lending work . I'm Rob Powell , partner at Cardinal Capital . In each episode we break down real-world strategies to get your business funded and keep your deal and your banker happy , without all the jargon and fine-print headaches . Let's get to it . Have you ever played jingo with a group of friends where everyone's pretending to be calm but secretly they're sweating bullets ? That's what capital stacking feels like for a lot of deals , except , instead of wooden blocks , it's millions of dollars on the table and instead of laughter when it all collapses , there's usually panic . There's usually panic In commercial lending .

Speaker 1 0:47

Your quote-unquote capital stack is the order and structure of your funding sources Senior debt , mezzanine debt , equity , bridge financing , maybe some grants or taxes , tax credits In the mix . Each one has to fit in the right place in the right order with the right timing . If you misplace even one piece , the structure becomes wobbly , and lenders hate wobbly . I've seen it firsthand . Picture a development deal where the equity partner hadn't actually wired their full commitment yet . The senior lender was waiting on those funds before they released theirs . The mezzanine lender started to panic , pulled their term sheet and in a week the deal went from 90% done to dead on the table . The fix Map your capital stack like a military operation . Know which piece comes first , second and third , and make sure each player knows their role and their timeline . Get your commitments documented , not just promised . Let me say that again Get your commitments documented , not just promised , and never , ever , assume one funding source will adjust their timeline to fit yours .

Speaker 1 1:58

At Cardinal Capital , we're like the friend in the world who steadies the table when no one's looking . We keep the stack stable so you can win the game without picking up the pieces afterwards . So your takeaway don't just have a stack , have a stacking strategy . That's it for this episode of Capital Stack . If you've got a deal that needs a smarter structure or a client who's outgrown your credit box , cardinal Capital can help . We're in the business of getting good deals done , even the ones that don't fit neatly into the bank's playbook . Connect with me on LinkedIn or visit cardinalcapnet to learn more . Until then , keep your stack steady and your deals moving forward .