One of the key risks we educate our clients on is financier risk – i.e. the risk your financier won’t be able to support you as you grow your business. This may be due to the financier’s risk tolerance for a particular industry or their policies around security, or simply that the client hasn’t been able to adequately communicate their business and financial information in a compelling manner.
However, for some of our larger clients this may also require introducing another lender(s) to their funding arrangement under a club or syndicated financing arrangement. The advantage of this is that you end up with two or more lenders with capacity and appetite to provide finance, as well as competition for your other banking business, such as transactional banking, merchant facilities or foreign exchange. These arrangements can also be structured so that fees and margins are competitively bid – meaning that you can realistically end up with a better all up funding cost. Of course there is the cost of getting this type of arrangement in place, such as legal fees, but this is often offset by the flexibility and additional capacity such structures provide now and into the future.
So indeed, in some instances an introduction of an additional lender(s) is a good strategy; however, sometimes a restructure with your existing financier will go a long way to ease your concerns. Which path should you take?With a preliminary review of your current financing arrangements, Balanz can provide valuable insights into your best way forward…
Contact Kerry Gillan on firstname.lastname@example.org or 0437 607 815
Balanz – Your Partner in Business Finance
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