Taking the example above, a company borrows £1,000,000 at 10% on a 3-year term, with a 1-year repayment holiday and then equal monthly repayments. The investing Members will receive about £200,000 of interest.  The company’s revenues double between the 12-month period before the loan and the 12 months before the repayment date. The profit on the Warrants will be £100,000  

This is a gross return of 30% on the money loaned equivalent to an internal rate of return of about 18%. This is an illustration. There is no guarantee that the Warrants will make a profit. On the other hand, the cost of the Warrant is comparatively very little.

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