Turnaround finance is designed for businesses going through a period of instability or administration, that need cash flow assistance to stave off insolvency, or to bridge a temporary but critical gap, caused for example, by the sudden loss of an important client.
For many distressed companies, the typical routes of funding are not available. The risk of providing funding to a company in such a predicament is, for the majority of lenders, considered too big a risk. Why would a firm consider providing a loan to a company, with a question mark over their ability to repay, when plenty of lower risk clients with positive credit histories are enquiring too? As a result, the options for in-trouble businesses can be very limited. Banks too are unlikely to offer a realistic solution. While some do offer financial restructuring options, they tend to deal with the most complex cases and largely, these involve bigger companies with above average turnovers.
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Where does that leave you?
Running a business with the threat of impending administration hanging over you is incredibly stressful. As an owner, you are likely to be investing a lot of emotional effort into the company and taking on a lot of pressure. It is not uncommon for people in this situation to go without a salary for extended periods, further fuelling the stress. When going through periods like this, it is important to enter into a funding relationship that you know will ease the difficulties, support both you and the company and certainly not make things worse.
Of the funders that will consider your case, most will not be the right fit. A successful turnaround finance strategy must involve trust and a financial team not only with the right experience, but the appetite to solve a business’s problems. Taking this into consideration could prove to be vital, especially at a time when you will need to make a quick decision to keep the company afloat.
The right relationship
Nucleus considers each business on its individual merits – there is no one size fits all solution. We know that banks tend to make loan application decisions based on a box-tick basis. The Nucleus team rather invests time in getting the details right and getting to know the business in question. The complex and risky nature of turnaround finance means that a specifically tailored solution will serve all parties best. Most problems have a work around, and whether this is straight forward or involves combining a variety of products, it is worth looking for. While this isn’t always the cheapest option, a bespoke solution is worth it.
Despite this approach, we appreciate that for businesses fighting insolvency, time is of the essence and this reflects in our decision-making speed and deal turnaround time. Turnaround finance facilities can often be delayed by legal checks, independent from the lender, yet in our capacity as advisors supporting the company, this is something we ensure doesn’t slow the process down.
Get in touch with one of our experts to discuss how Nucleus’ invoice finance services can address your urgent funding requirements, or for more information on our other products, including unsecured business loans, secured business loans and business overdrafts, take a look at our alternative business funding page.