Welcome to the third post in our 'Building a resilient balance sheet for 2021' series looking at solutions and opportunities for 2021 viewed through the balance sheet. We now move to short term creditors.
Ian Lomas and Chris Duffill of Gateley Vinden’s Corporate Debt Advisory team look at current options, availability and ease of access to funding.
Many funders have participated in the various Government support schemes. Their availability to make further monies available may be impacted as a result. The key, therefore, is to demonstrate you have a viable, well-run business which is worth supporting.
What happens if additional funding is required?
If additional funding is required, the best place to start sourcing this is usually your existing funder. Treat them as a key stakeholder. Proactive engagement is crucial to establish the goodwill and trust necessary to negotiate an extension or additional funding. Ensure you can articulate your vision and business plan, supported by realistic and evidence-based forecasts.
Your existing funder may no longer be right for you, for example, because your business is better suited to specialist funding, or because a lender is reluctant to increase lending into a particular sector.
Ease of access to funding
The good news is that the funding market has changed significantly post 2008, with the establishment of numerous new funders across the market. Long gone are just the options of the four main clearing banks, although in terms of volume they still dominate. There is now a much wider supply of potential funders all looking to grow.
Many of these new funders are specialists looking to focus in certain sectors or into certain segments of the market, where they are offering term loans, asset finance, invoice finance, stock finance, export finance, property-backed facilities or cash flow loans. They often have different attitudes to risk, which is reflected in their pricing.
What happens if you can't approach your existing provider?
If you don’t feel able to approach your existing provider, given there are an array of funders out there, I would recommend you seek professional advice from either a specialist debt advisor, your Solicitor or Accountants.
In our next post, we look at longer-term creditors and whether their economic interests could be maintained whilst converting their debt into flexible equity structures that do not unduly dilute ordinary shareholders.
10 Gateley insights for a resilient balance sheet
Follow our ten-part series looking at solutions and opportunities for 2021 viewed through the balance sheet.
Introduction: How to prepare a resilient balance sheet for 2021
Article one: How to ensure the assets on your balance sheet are working for you
Article two: Current assets: separating the ‘can’t pay’ from the ‘won’t pay’ customer
Article three: Short term creditors: how to access funding
Article four: Long term creditors: converting liabilities to equity
Article five: Long term creditors: the benefits of informal creditor arrangements
Article six: Net Assets: what the new restructuring regime means for your business
Article seven: Net Assets: how 'pre-pack administrations' can save your business
Article eight: Net Assets: Advantages and pitfalls of buying insolvent businesses
Article nine: How to unlock capital from inefficient equity structures
Article ten: Shareholder funds: when can a company declare a dividend?
Gateley Plc is authorised and regulated by the SRA (Solicitors' Regulation Authority). Please visit the SRA website for details of the professional conduct rules which Gateley Legal must comply with.
Got a question? Get in touch.
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