Even when the economy becomes more stable, the capital market is still too conservative maintaining the need for creativity when financing business. Chat from the bank is we don’t see enough quality offers, while intermediaries & counting business owners with you don’t approve a pretty good offer. So this creates an environment where creativity is very important.
While fixed rates at a record low level as well as leverage capacity, which means that money may be cheap but you cannot borrow much. If you are a small or medium business owner who is looking for additional capital realizes that most banks are not interested. Even it’s common today for banks to see you as an overlerage with your current debt. There are several ways to get creative and get the funds you need including:
Recapitalization with additional capital uses the company’s strength with a new business plan that increases profitability and value.
Unitranche financing – uses one intermediate source to provide senior financing above what they usually do, secondary and subordinated financing that they usually do & the higher leverage / higher risk financing they usually avoid. Combining all three under one umbrella allows leverage, risks & levels to integrate easing concerns for lenders and increase the capacity of the borrower.
Special Financing Groups – Other traditional financial institutions have expanded their operations by buying or building a small separate separate loan group that serves a small niche.
Private lenders – personal lenders are seen putting money to the company towards the right direction and make the right decisions regardless of their past.
Utilizing intangibles – Intellectual property and brand value actually have value if you know how to present it to the right funding source.
Sources-based assets receivable receivables, equipment financing, financing purchase orders and other trade financing and refinancing greatly vary in terms and rates so we are diligent in shopping for the best offer and have a network to get our biggest leverage at the lowest cost.
The point is you have to be ready to think outside the box to reach the same financing level you can easily reach five years ago. While money is still out there business needs to be prepared to work harder and smarter to succeed in achieving their funding goals. This loan climate is expected to last for some time so it is best to be used for it and adapt to the rules of new funds.