How to Get Funds in Crisis?
Businesses who cannot persuade their existing lenders to lend them money. In the event of an emergency need or urgent challenge, alternative sources / banks / lenders will be required to obtain funds.
It is generally considered a high-risk profile by the new set of financial institutions. Where existing banks cannot meet the desired need. As a result, it should be planned dynamically with a well-drafted usage of additional funds. It is also important to present the prospective results following the infusion of additional funds. Assuring reasonable revenue growth and identifying underlying risks is crucial.
Having the right mix of lenders/banks will allow a business house to tap into additional credit lines over and above its existing limits. Lenders take additional risk based on their risk appetite, and funds can only be raised through loan syndication.
Additional funds may be extended as a credit line, which serves as a limit to manage cash flow for adhoc expenses. The interest will be charged according to the usage. Usually these demand loans can be recalled by lenders any time or you may repay full anytime.
Term loans are perfect for business growth and operational expenditures or for large one-time transactions that make the business more capable of leapfrogging ahead. Funds of this type are usually extended under loan syndication, with each lender contributing to the fund according to its risk appetite. Repayments are made on a monthly basis and for a fixed term to clear the entire amount of interest and principal.There is only a limited need for recurring compliance, which is only limited to timely repayment of monthly installment obligations. The funds can be repaid in full if the purpose for using them has passed.
Additional funds may be needed for buying machinery & equipment under various machinery loan schemes. As a general rule, the loan is secured based on the expected cash flow from the installation of such a machine. In addition to existing limits, high payback setups & well defined executions can be funded by new lenders on a standalone basis.
Funding amounts depend on lenders’ understanding of specific machines. It means when a machinery setup is customised & its discarded value is negligible then few institutions which have thorough understanding of such machinery will come forward to lend without collateral.
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