YOUR COMPANY IS LOOKING FOR BUSINESS TURNAROUND FINANCING!
HERE'S THE TURNAROUND STRATEGY YOU'VE BEEN LOOKING FOR FINANCIAL DISTRESS SITUATIONS!
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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Struggling to keep your business afloat amidst financial turbulence?
Discover how restructuring loans can provide the financial breathing room your business needs to thrive.
7 Park Avenue Financial originates business financing solutions for Canadian Businesses – We offer RESTRUCTURING LOAN solutions that solve the issue of cash flow and working capital – Save time and focus on profits and business opportunities
Restructuring Loans and Turnaround Financing Solutions
Business turnaround financing for Canadian firms is one of the most challenging forms of corporate finance for those firms experiencing distress from either internal or external factors, more often than not a combination of both.
When it comes to turnarounds and restructuring your business finances it can be challenging. Restructuring loans offer a strategic approach to managing debt and revitalizing your business cash flow - that allows your company to regain financial stability.
RECOGNIZING THE NEED FOR CRISIS MANAGEMENT IN YOUR CORPORATE TURNAROUND
You can call it crisis management, turnaround management... whatever, bottom line, your company might need restructuring loan financing and or debt restructuring debt consolidation around existing debt or a debt settlement around the company's financial situation.
In some cases, the goal might be to renegotiate lower interest rates for some form of debt relief if that is possible based on outstanding debt circumstances.
How does a firm recognize that loan restructuring needs, and what tools and financial solutions are available in Canada to implement a financial reorganization that makes sense? Understanding the debt restructuring process is key for facilities and interest rates that make sense for your transaction.
Challenges of Restructuring and Turnaround
Without a doubt, it's about understanding both the causes and implications of a company's financial problems and then implementing a solution.
YOUR RESTRUCTURING ' TO DO ' LIST
When Canadian business owners and financial managers need financing changes to face their ' to do ' list, several key focuses must be forged. They include restructuring your current debt, potentially downsizing your business, and addressing various legal issues with your current lenders, which might be both operating lenders and term lenders such as lessors, senior bank facilities, etc.
ANSWERING THE BASICS QUESTIONS IN TURNAROUNDS
How do you finance a business restructuring?
A common-sense way of looking at things is to address some fundamental questions, in effect:
What is going wrong, and how must management take responsibility?
Do we have resources (i.e. assets) and financial assistance, and expertise to begin and complete the turnaround?
FINANCING A CORPORATE TURNAROUND
Naturally, depending on the size of your firm, the challenge has different levels of complexity. Distressed situations can be addressed in either a ' strategic ' manner or via an operating turnaround.
Our comments are more focused on the operating turnaround... it’s the basics such as increasing sales, lowering costs, and refinancing assets.
In many cases, new creditors must replace your current creditors.
Again we emphasize that your current firm might be a start-up or one that has experienced tremendous growth and then stalled, or in some cases, your firm has been around a long time, and financial issues have come ahead and need to be addressed. All these firms require external turnaround management assistance, quite frankly, someone who has been here before.
SOLUTIONS FOR YOUR DISTRESSED FINANCING SCENARIO
At the end of the day, it's about looking at your refinancing options, including secured debt, bank business loan debt, and other debt with commercial finance companies.
What then are potential solutions for corporate distressed situations?
In Canada, those solutions are debtor-in-possession financing, asset-based lending, and monetizing current assets via working capital facilities that include accounts receivable and inventory and equipment/ fixed asset components, as well as real estate if applicable. Other less widely used options include securitization of contracts, tax credit financing, and supply chain financing.
Pricing in turnarounds will always reflect asset and credit quality, deal size, and overall deal quality via a traditional or alternative lender. In all cases to justify the monthly payment on any facility is key based on an existing loan or new facility.
In some cases, owners might consider a personal loan to the company, via secured debt or on an unsecured debt basis.
Asset-based solutions are among the most common types of restructuring/refinancing methods.
KEY TAKEAWAYS
Debt restructuring: Modifying the terms of existing debt to improve repayment terms.
Financial flexibility: Ability to adapt and respond to changing financial circumstances.
Loan modification: Altering loan terms to accommodate the borrower's financial situation.
Business turnaround: Strategic actions to reverse a company's declining financial performance.
Debt consolidation: Combining multiple debts into a single loan with better terms.
CONCLUSION - RESTRUCTURING LOANS CANADA
Business turnaround financing and a debt restructuring proposal are some of the most challenging aspects of Canadian business financing. Call 7 Park Avenue Financial, a trusted, credible and experienced Canadian business financing advisor for solutions that make sense for your management team and its financial recovery.
FAQ
What is a restructuring loan, and how can it benefit my business?
A restructuring loan is a new loan offered by a lender to modify the terms of your existing business debts. It can benefit your business by lowering monthly payments, simplifying debt management, and providing breathing room to focus on recovery without immediate default pressure.
How does debt restructuring differ from debt consolidation?
Debt consolidation involves taking a new loan to pay off existing ones. Restructuring, however, negotiates changes to the terms of your existing loans with the original lenders themselves.
Can restructuring loans help improve my business's cash flow?
Absolutely! By lowering monthly payments or extending the repayment term, restructuring frees up cash that can be used for essential business operations or growth initiatives.
Are there specific eligibility criteria for obtaining a restructuring loan?
Yes, lenders typically consider factors like your business's financial health, past repayment history, and future viability. A solid turnaround plan demonstrating your ability to recover is often crucial.
What steps are involved in the loan restructuring process?
Negotiation: Discuss your situation with your lenders and propose a restructuring plan. Documentation: Prepare financial statements and a turnaround plan to support your request. Approval: The lender will assess your plan and decide on the terms of the restructuring loan (if approved). Agreement: Sign the new loan agreement with the revised terms.
How does bankruptcy affect eligibility for restructuring loans?
Bankruptcy can make it difficult to qualify for a restructuring loan. However, Debtor-in-possession (DIP) financing is an option available during bankruptcy proceedings.
Are there alternatives to restructuring loans for businesses in financial distress?
Yes, some alternatives include selling assets, securing new investors, or negotiating payment plans with vendors.
What are the long-term implications of opting for loan modification?
While restructuring can provide immediate relief, it may extend your debt obligations. Late payments on the new loan can further damage your credit score.
Can restructuring loans be used for personal debt management?
No, restructuring loans are specifically for business debts. Personal debt requires different loan products.
Are there government programs or initiatives supporting businesses with restructuring loans?
Some government programs offer loan guarantees or subsidies for qualifying businesses in specific industries. Research programs in your location.
What are the primary benefits of restructuring loans for businesses?
Improved cash flow, simplified debt management, and a chance to focus on recovery are the key benefits. The ability to meet new or revised monthly payments is key when you restructure debt.
What options do businesses have if they struggle to meet the terms of a restructuring loan agreement?
Communicate with your lender immediately. They may be willing to work out a further modification if your business faces unforeseen challenges.
