YOUR COMPANY IS LOOKING FOR BUSINESS RESTRUCTURING FINANCE!
RESTRUCTURING AND TURNAROUND FINANCING SOLUTIONS
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Financing & Cash flow are the biggest issues facing businesses today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
RESTRUCTURING BUSINESS DEBT - SUCCESSFULLY!
A business debt restructuring loan. Many small businesses / medium-sized companies are often challenged to make key changes to their debt and overall capital structure to make the business stronger and allow growth. Volatile times and the business challenges of 2022 require some serious decisions from business owners/financial managers.
In many cases, businesses have already tried internally to address key financial issues revolving around their business model, pricing and their investment in inventory and accounts receivable, as well as staffing issues.
Is it all doom and gloom - Not necessarily !! ABL financing (asset based lending) offers a strong solution for Canadian firms that require some sort of restructuring. It's a solid method of leveraging your business asset base to reorganize your business financing.
There are, of course, many reasons for business loan restructuring. Why does this type of financing suit the immediate needs of the business owner or equity investors? Simply because ABL takes a different look at all the assets of the remaining business, including inventory, receivables, and fixed assets.
THE FOCUS ON LEVERAGING ASSETS
By focusing on the assets of the business an asset based transaction typically provides significantly more breathing room for the business and its financial obligations as it settles into a new stage of its life. The ability to leverage these assets provides more liquidity at rates commensurate with the current overall credit risk.
BANKS RESTRUCTURING VERSUS ABL RESTRUCTURING
While a bank solution for debt consolidation or turnaround financing for such situations might significantly emphasize cash flow / accrued interest etc, the ABL facility takes the posture that assets are the key collateral. This focus allows asset-based lending / the non bank lender to supersede a more traditional banking solution which often time simply is not available due to the business's current state for a debt restructuring proposal. Often unrecognized is the issue that many bank workout managers are overworked to properly address saving a business!
The financial institutions with diminished workout groups after having been kneecapped in the manufactured credit cycle stretch. The larger companies starting small-scale layoffs and restructurings.
ANY COMPANY OF ANY SIZE CAN BENEFIT FROM ABL FINANCE RESTRUCTURING
The other benefit of an ABL asset-based business debt restructuring loan facility is simply that it's available to the SME sector of the market. Larger or public corporations requiring restructuring tend to have access to business credit that only large-capitalization corporate firms can access, and at better interest rates . Companies in that, for example, 1-50 Million dollar range can view an ABL solution as their solution to restructuring.
WHY ABL FINANCING WORKS ON YOUR WAY BACK TO PROFITABILITY
Firms in restructuring mode quite often are focusing on getting back to breakeven and profitability. The ABL solution is simply more patient in allowing them to do that. Since other models of financing and business loans focus on cash flow/ebitda etc. the asset-based finance solution allows a firm with declining or lower cash flows to leverage the asset base for liquidity.
ABL FINANCE IS TYPICALLY NOT DEBT
And by the way, although we refer to this financial restructuring vehicle as a loan in effect it’s the monetization of assets, so there is no ' pay down ' per se. ABL restructuring solutions are often paid out by a Canadian chartered bank when it comes to a return to profitability and growth and a stable balance sheet.
The challenges for the business owners and the financial manager is significant when it comes to restructuring. It's all about cost structure, sales revenue, efficiencies, asset sales... or upgrades, and people issues. These challenges, safe to say, need time and an ABL financing solution can give your firm that time.
CONCLUSION - KEY TAKEAWAYS!
Are there some solid takeaways when it comes to looking at your restructuring finance needs? We think there are, and they include the fact that this type of solution needs time to take hold, sales volume takes a while to regain stride, and the business owners and managers who are managing through the current situation need to be able to measure progress
Speak to 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor who can assist you in relieving the burden of a financial restructuring scenario via an asset based ABL facility. It's a solid working capital and business survival tool that will provide significant improvements to your cash flow growth via loan restructuring methods and solutions.
FAQ FREQUENTLY ASKED QUESTIONS MORE INFORMATION PEOPLE ALSO ASK
What is loan restructuring?
Availing loan restructuring offers a business to avoid any default on current or long term debt obligations. Given that the business credit scores hae deteriorated via slowness or default on a loan agreement any positive turnaround in the capital structure of the business will help avoid insolvency .
New repayment schedules under a loan agreeent might often come with higher interst rates but longer amortizations and more favourable covenants around balance sheet ratios and interest payments. Debt restructuring works best after the formal process of a standstill agreement or forbearance agreements have been formally eliminated . In many cases new terms and covenants and required business financial statement ratios are put in place by a senior lender of other lenders.
Can banks restructure loans?
Banks can restructure loans . typically done when the business has been placed in a ' special loans' category on the banks books which requires the need to restructure debt - Often amortizations are increase which will often assist in lowering a monthly payment on any term debt owing . In any cases repayment terms are extended and rates are adjusted to ensure a more positive relationship with the bank.
How does debt restructuring work?
A restructuring plan allows business lenders to restructure debt / existing debt via a new or adjusted business loan. This allows successful small business restructuring for owners of smaller and mid sized companies to adjust payment terms to avoid bankruptcy or some other default. Getting all creditors to agree will often impose many challenges on business owners and financial managers as each part will want to ensure appropriate security over company assets they have financing. Adjusting outstanding debt in current or long term liabilities will help ensure future survival and success.
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