Equity Line of Credit (ELOC)
An Equity Line of Credit (ELOC) is a committed standby equity facility from institutional investors that lets a public company draw capital when it needs it, on its own timeline — up to $350M in committed capital after listing.
A committed standby equity facility from institutional investors — draw capital when you need it, on your timeline.
What You Get
- ✓Capital on demand after listing
- ✓Issuer controls timing and draw size
- ✓Institutional counterparties arranged by us
- ✓Pairs naturally with a direct listing
Built Into Every Deal
Flat-fee engagement. Directly Listed charges a flat platform fee plus an equity grant at signing — quoted individually for every deal. No percentage-of-raise surprises.
eSignature execution. Subscription agreements and engagement letters are executed through Adobe Acrobat Sign with full audit trails.
Payments. Funds are handled directly from investors to the issuer — by card for amounts under $5,000, or by ACH or wire transfer straight to the issuer's bank account. Directly Listed never holds the funds.
Issuer-exemption model. Directly Listed is a technology platform; offerings are conducted by issuers in reliance on their own exemptions, with compliance workflows — accreditation, investor limits, KYC — built into the software.
Flat Fee Disclosure
Our SEC-licensed attorneys, consultants, and listing advisors are all paid out of the flat fee we charge. There are no separate legal bills—only third-party costs, such as legal opinions, valuation reports, audits, transfer agent and DTC fees, exchange application fees, and any annual exchange fees.
The flat fee is determined by the scope of services provided and your company's stage, along with an equity grant that is likewise set according to your startup's stage and needs. Every deal is quoted individually.
Equity Line of Credit — Term Sheet
A $750 million equity line of credit (ELOC) can be a useful tool for our listed companies to raise capital, providing a flexible and cost-effective means of obtaining funds. An ELOC is a financial arrangement between our client and a referred financial institution in which the client can access a pre-approved equity facility — typically secured by the company's common stock — and draw down as needed, up to $750 million.
- Duration
- 24 or 36 months.
- Determination of Purchase Price
- Generally a 5–10% discount to the volume-weighted average price (VWAP) of the company's common stock over the 10 business days following the company's delivery of a drawdown notice to the investor.
- Minimum Acceptable Price
- The company may specify a minimum acceptable price in connection with a drawdown notice, but is not required to do so.
- Investor Fee
- The investor typically receives a fee in stock upon signing the equity purchase agreement. Fees vary, but recent deals have ranged from 2–4%. The investor also typically receives a small expense reimbursement (e.g., up to $50,000).
- Registration Statement or Prospectus Supplement
- If the company does not have an effective registration statement on file for the investor's shares, it typically must file a new registration statement (Form S-1, S-3, F-1, or F-3) within a specified period after execution of the equity purchase agreement (e.g., 30 or 60 days) or pre-listing, and cause it to become effective as promptly as practicable (some deals impose a 90-day deadline; some, 10 business days after notice that the statement is not subject to SEC review). The registration statement must be effective before the company can draw down on the equity line. If an effective registration statement already exists, the company typically files a prospectus supplement describing the transaction before commencing sales.
- Representations
- The company makes a full suite of representations and warranties about its business and its SEC disclosure.
- Short Sales
- The investor typically represents that it does not have a net short position in the common stock and covenants that it will not enter into or effect any short sales of the company's common stock.
This summary is provided for information only and does not constitute an offer, commitment, or legal advice. Final terms are set in the definitive equity purchase agreement for each engagement and are subject to the referred institution's approval and applicable law.
Equity Line of Credit (ELOC), in depth
An equity line of credit is a committed standby facility: an institutional investor agrees to buy up to a set dollar amount of a public company's newly issued shares over a defined term, typically two–three years. The company draws at its own discretion by sending a drawdown notice; the investor is obligated to buy, but the company never has to draw. Shares are priced off the volume-weighted average price over a short window — several trading days — less a discount that commonly runs 5–10% for healthy companies.
Commitments range from a few million dollars to hundreds of millions; SEC filings show facilities of $40 million and $150 million. Draw sizes are gated by trading volume, and two caps constrain the facility: exchange rules require shareholder approval to issue 20% or more of outstanding shares at a discount, and beneficial-ownership limits of 4.99% or 9.99% cap what the investor holds at once. The company can set a floor price on any draw. Setup costs include a commitment fee, often paid in stock at around 2–4%, and because the investor resells to the public, the company files a resale registration — Form S-1 works, so S-3 eligibility is not required — and cannot draw until it is effective.
Dilution occurs only when the company draws, which makes the ELOC a natural companion to a direct listing that raised no primary capital. Many Directly Listed clients sign the equity line alongside the listing itself so committed capital is available from the first week of trading, scoped as a flat platform fee plus an equity grant.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
Equity Line of Credit (ELOC) — questions & answers
What is an ELOC, and how does it work?
A corporate equity line of credit is a standby commitment from an institutional investor to buy up to a set dollar amount of the company's newly issued shares over time — and the company draws on that commitment when it chooses, selling shares to the investor to raise cash. It works like a line of credit in reverse: instead of borrowing money to repay, the company sells its own stock in tranches at its discretion. When it wants capital, it sends a drawdown notice; the investor buys shares priced off the recent market price, typically at a modest discount, over a short pricing window. The company controls the timing and size of each draw, up to the facility's dollar cap and term.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
How is the price set when a company draws?
Each drawdown is priced off the market during a short window around the draw, minus a pre-agreed discount. A common structure prices the shares off the volume-weighted average price (VWAP) over a set number of trading days following the drawdown notice, less a discount — frequently in the range of roughly 5–10% for a healthy company, higher for riskier issuers. The discount compensates the investor for committing capital and for resale risk. The company may also set a minimum acceptable price (a floor) in the drawdown notice, below which shares won't be sold, protecting it from issuing stock too cheaply if the price drops during the window. Pricing is market-referenced and current, not fixed months in advance.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
How much can a company raise through an ELOC?
The amount is set by the negotiated commitment, and real facilities range from a few million dollars to hundreds of millions — SEC filings show commitments like $40 million for a de-SPAC company and $150 million for a larger issuer. The practical ceiling on any single draw is tied to the trading volume of the company's stock, so the investor can resell without crashing the price, and the total is capped by the commitment amount and often by exchange caps — a 19.99% share-issuance limit unless shareholders approve more. So while the headline commitment can be large, how much a company can actually raise depends on its stock's liquidity, price, and issuance limits, not just the facility's stated cap.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
Is a company obligated to use its ELOC once it's set up?
No — this optionality is one of the ELOC's defining features. The investor is committed to buy shares when the company draws, but the company has the right, not the obligation, to draw. It can use the full facility, part of it, or none at all, entirely at its discretion over the term. That means the company only issues shares — and only dilutes existing shareholders — when and if it chooses to draw. The one exception is the commitment fee, often paid in stock at signing (recent deals around 2–4%), which is issued regardless. The asymmetry — investor committed to buy, company free to sell or not — is central to the ELOC's appeal as standby capital.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
How does an ELOC compare to a PIPE?
Both raise equity from institutional investors in a public company, but structure and timing differ. A PIPE is typically a one-time private placement: the investor buys a block of shares at a set discounted price in a single transaction, and the company gets the capital up front. An ELOC is a standing facility the company draws on repeatedly at its discretion, with each draw priced off the then-current market. A PIPE is a lump sum now; an ELOC is capital-on-demand over a period, diluting only as drawn. Companies needing an immediate infusion tend toward a PIPE; companies wanting ongoing access prefer an ELOC — and the two can be complementary.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
What does an ELOC cost a company?
The largest embedded cost is the discount to market on each draw — commonly around 5–10% for healthy companies, higher for riskier ones. There is usually a commitment or structuring fee, frequently paid in stock at signing (recent deals around 2–4%), plus a modest expense reimbursement, sometimes up to roughly $50,000. The company also bears the legal and registration costs of the resale registration statement and facility documents. On Directly Listed, deals are scoped as a flat platform fee plus an equity grant rather than a percentage of the raise. Altogether, the effective cost of capital under an ELOC is generally higher than an ATM program but can be lower than a firm-commitment underwritten offering or bond issuance.
Related topics: PIPE · NASDAQ Direct Listing · Strategic & Large Investors · Issuer FAQ
More questions? Browse the complete FAQ — 459+ answers across every structure, the Issuer FAQ, or the Investor FAQ.