How to Get Funds in Crisis?
When a Business House is not able to convince its existing lenders / Banks to Get Fund required for emergency need or urgent challenges then it has to approach alternative sources / Banks / lenders.
The new set of Financial Institutions generally take it as a risky profile where existing Banks unable to fund the desired need. So it should be planned dynamically with well drafted usage of additional funds. Also the prospective results after infusion of additional funds, should be presented in reasonable revenue growth & of-course with clear defining of underlying risks.
With right mix of lenders / Banks, a business house can tap additional credit line over & above the existing limits. The new lenders take additional exposure according to their risk appetite & desired funding can be raised through Loan Syndication only.
Type of Funds
The new set of lenders may extend additional funds in the form of credit line which is 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.
The term loan is perfect for growth & operational expenditures or for one-time large transaction to make the business capable for leap jump in execution. These type of funds generally extended under loan syndication & each lender contribute according to its risk appetite. The repayments happen on monthly basis & for fixed tenure to clear complete amount of interest & principal.
Need for recurring compliance is minimum & just limited to timely repayment of monthly installment obligations. These can be prepaid in full if the purpose of availing such funding is extinguished.
If the additional funds required for buying machinery & equipment then it should be raised under various schemes of machinery loans. Generally it is secured on the bases of expected cash flow from the installation of such machine. With high payback setup & well defined executions can be funded by new lenders on standalone basis over & above the existing limits.
The quantum of funding is dependent on individual lenders’ understanding of that particular machinery. It means when a machinery setup is customized & its discarded value is negligible then few institutions which have thorough understanding of such machinery will come forward to lend without collateral.