We often receive enquiries from brokers seeking borrowing for SME clients who are struggling to obtain funding from banks and other finance providers.

Often, this will be as a result of having been through a couple of loss-making years, or they are only just breaking even.

In order to help them find their way back to profitability, they require capital to fund growth projects, such as business modernisation, or working capital to help them through a short-term rough patch.

They may also have existing debt facilities that are at the end of term and, as a result, will be seeking new borrowing.

In these circumstances, turnaround finance could be the ideal financial solution.

Turnaround funding is all about looking forward, not back

While traditional lenders tend to look in the rear-view mirror and ask for at least three years of trading history, we take a far more flexible attitude towards lending to businesses.

To our mind, as in the world of investments, “past performance is not indicative of future results.”

For this reason, we will always look to get under the bonnet of deals. We look at what has happened over the past few years, consider the client’s turnaround strategy, and base our lending decisions just as much on projections and the business plan as current trading.

Common turnaround scenarios include:

• Refinancing expiring loan facilities, creating up to three years of valuable breathing space for borrowers
• Releasing equity for investment in business growth
• Restructuring existing borrowing to assist with affordability and improve the day-to-day cash position.

Furthermore, we can offer a drawdown facility to create an extra layer of valuable flexibility. This means that your client doesn’t have to take the whole loan at once. It can be tied in with their plans, and be far more cost-effective as they aren’t paying the full interest rate on funds they aren’t using.

Underpinning our approach is a desire to create borrowing facilities around a borrower’s needs and plans as opposed to our own.

Turnaround funding can help businesses recover from unforeseen circumstances

A great example of how our turnaround strategy can help businesses has been a series of loans we have made in the last two years to hotels specialising in weddings and events.

Their business would have been profitable until the pandemic and resultant series of lockdowns in 2020 decimated their income, literally overnight.

Hotels needing to refinance their commercial mortgages since the pandemic will have found banks sympathetic, but unable to help due to the need to evidence three years of profitable trading.

We have taken the view that this was no reflection on their business ability and, looking forward, could see strong order books. Indeed, some of these hotels were doing two weddings a week due to the pent-up demand created by the pandemic.

Get in touch 

If you’d like to find out more about our turnaround lending proposition or you have a specific case you would like to discuss, give us a call.

Contact our team today