Different lenders have different appetites for risk and different pricing models to reflect the risk. In circumstances where the business is experiencing financial pressure, one institution might want to be repaid but another may be prepared to fund the business.
The impact of the pandemic will see many companies that have traditionally been able to borrow on a low leverage cash flow basis look elsewhere for funding as the cash generation has been interrupted and there is a lack of visibility over the sustainability of trading post-pandemic.
That alternative finance may come from a special situations debt fund, a sector specialist, or some form of asset finance. It’s likely that many companies will require something over and above a traditional short fund facility, such as an overdraft, and will need to look at new and different sources of debt in order to support their cash requirement in the medium-term as they return to profitable trading and rebuild their trading record to support a cash flow lend.
We have a great deal of experience in the management of a strained incumbent lender and the transition to a different lender who can support the business through a period of rebuilding. Furthermore, working alongside our colleagues in circumstances where management need the benefit of professional advice to negotiate difficult trading, we can advise on funding to allow a business to restructure, either informally through agreed payment terms, or more formally via a procedure which protects the business and assets.