Informed Decision-Making: Enjoy peace of mind knowing that your choice of funding partner is well-informed and strategically sound.
- Impact of making the wrong decision
- Behaviour of lender when covenants breach or business is underperforming
- Power of a lender under a breach, ability to take the business etc
Choosing a funding partner requires careful consideration. Every business faces unique challenges, and since business performance can fluctuate, it’s crucial to have a lender who will support your business through both growth and adversity.
When a business secures funding from a lender, it typically provides collateral, often in the form of a debenture and/or fixed charges over assets such as plant, machinery and property. To manage their risk, lenders may set financial covenants that the business must meet. Failure to do so can result in a breach of the borrowing agreement, giving the lender the right to take control of the business or force it to refinance with another lender.
We work with businesses to troubleshoot and refine financial forecasts, helping them understand potential scenarios if trading conditions change. With this information, management teams can make informed decisions when setting financial covenants that the business can sustain, even during challenging periods.
Additionally, it is crucial not only to understand the risks of borrowing but also to be aware of who you are borrowing from. We help business owners grasp the potential implications of borrowing from specific types of lenders and funds. For example, specialist peer-to-peer lenders, who borrow money from a pool of individuals, may need to repay their investors when your loan expires, which could prevent them from extending your funding term if more time is required to refinance. Alternatively, while borrowing from a private fund can offer flexibility, it’s important to understand the specific mechanics of the fund they are lending from and whether they have the capacity to provide follow-on funding or future support if the business needs it.
We interrogate and nurture relationships with all lenders to ensure we are always up to date with the latest products lenders offer.
