What is Restructuring And Debt Financing?
Many companies find themselves in financial distress from time to time. Perhaps sales didn’t meet projections, you are having issues collecting payment from customers, economic issues negatively impacted business or something like COVID-19 occurred. When you face distress, the last thing you want is to default on your current loans. This could put you in a dire situation and even put you at risk of closure. Fortunately, there is a financial solution when you are in financial distress – restructuring and debt financing.
Debt restructuring is a process in which a company refinances existing debt. This is done to avoid defaulting or face bankruptcy. Debt financing gives you more space to operate and flexibility in the short term. It can also make your debt management easier long term.
At Beacon, we can help all types of business who are looking for a debt financing solution. We know you don’t want to enter into a bankruptcy and we’ll do what we can to ensure you can find a solution to help you get out of financial distress and move your business forward.
There are many reasons why you may need restructuring and debt financing. In most instances, the company is in a financial situation they cannot easily recover from. It’s a common occurrence. Perhaps you may be having issues making current debt payments or you anticipate future financial issues. When you are in a difficult financial spot, turning to debt restructuring is the best option. The other is often bankruptcy, which is a last resort.
The process for debt restructuring can depend on your situation and financial needs. A company may choose to restructure a number of loans. Creditors are often willing to alter debt payment terms so the company can avoid a bankruptcy. This could be in the form of lowering interest rates on outstanding debt, extending the term of a loan or other options. Overall, debt restructuring improves the company’s chances of paying off outstanding loans.
There are three main types of restricting that companies should consider. The one a company chooses will depend on their situation, creditors, and other financial factors.
- Debt for equity swap: Creditors forgo a certain amount of debt in exchange for equity in the company.
- Bondholder haircut: Renegotiating with bondholders to make repayments at a discounted rate.
- Callable bond: This is to protect the company if interest payments cannot be made. The bond can be redeemed by the lender in times of lower interest rates.
At Beacon, we understand that you need financial flexibility and assistance. We can help you get the right financing at competitive rates for the terms that make the most sense for your business. We provide debt financing solutions and M&A advisory services to small and medium-sized businesses. Our advisors will work closely with you to ensure you have options and can avoid having to go into bankruptcy.
Is your company in financial distress? Are you looking for alternatives to bankruptcy? Then restructuring and debt financing is the solution you need. Give us a call today to explore your financing options with us.