Senior lenders are typically commercial banks or other institutional lending firms that provide senior debt to corporations for a variety of purposes. The most prevalent purposes include: accounts receivable financing, commercial real estate loans, growth financing, equipment financing, M&A financing, project financing, Small Business Administration (SBA) financing and working capital financing.
Because senior debt has first priority in the event of liquidation, it is a lower risk investment for the senior debt provider (compared to junior, subordinated debt, mezzanine debt or equity investments). Consequently, senior debt is the most common and most affordable form of financing for the debt seeker. That is, the cost of capital is lower for senior debt compared to other forms of financing.