The COVID-19 crisis is much more than just a health crisis. It is an economic crisis as well. Governments at all levels are doing what they can to help businesses, but for many who have had to close their doors for two months or longer, the damage may appear to be irreversible. Before you make the difficult decision to close your company’s doors for good – make sure that you have considered the alternatives. And by alternatives – we mean alternative financing.
If there are ways to save the business that you have put your blood, sweat, and tears into; if there are ways to bring your employees back to work; and if there are ways to continue serving your loyal customers, then you owe it to yourself to explore those options.
At CorFinancial, we offer our clients a variety of alternative financing options including mezzanine debt, bridge loans and dip financing. One of these methods might just be the right strategy to save your business.Mezzanine Debt
Mezzanine debt or mezzanine financing is a type of loan that you, the business owners can use when you have a viable project but don’t have sufficient or your own capital to invest. Say for example that, in order to get your business back up and running you need to purchase $1 million in inventory to supply customers who have placed orders with you and you only have $200,000 and your bank is only prepared to lend your company up to $600,000, Where do you find the last $200,000…providing that the deal makes sense and there is sufficient profit margin to justify the higher cost of this funding, a mezzanine lender will provide the required $200,000Bridge Loans
Bridge loans are another option that you might want to consider to help save your business in the wake of COVID-19. A bridge loan is a loan that literally bridges the gap between other forms of financing and revenue. For example, say in order to save your business, you move to a less expensive building, but you still have to sell your old building or some of your equipment. A bridge loan can give you the funds you need to move into your new place while your old place is still on the market.
While there are many consultants and brokers out there, CORFinancial specializes in working with business owners to help ensure that all parties are treated fairly and ethically. Case in point, we recently worked with a buyer and seller in a $6.25 million restructuring deal of a development property that was about to be sold under Power of Sale by the existing lenders which would have resulted in substantial losses all round. During our due-diligence, we discovered that the initial party buying the property had defaulted on their agreement. We immediately changed our focus and developed a new strategy which resulted in the seller selling the property to a credible developer, thus mitigating the damage that had been done with the unscrupulous original buyer. This illustrates the importance of having expert loan advisors such as the CORFinancial team on your side.
If you would like help in discovering what types of financing might be most suitable to help you save your business, we will welcome your call. Contact us today for a free consultation.