MT Expert: Get a decent refinancing deal

Has the bank gone jittery on you? Need to raise money from elsewhere before everything goes belly-up? Here are some tips on presenting your business in the best possible light to get a better financing deal.

by David Gilbert
Last Updated: 12 Mar 2013

The main driver for refinancing comes from a break down in relations between a company and its lender. This is often referred to as lender fatigue or lender concern. 

It is important to remember that just because your lenders have expressed concern does not mean that there won’t be other lenders out there interested in your refinancing opportunity. 

To maximise your chances and to ensure the process runs smoothly, you will need to present a succinct refinancing business case for potential lenders. 

This should include: 

  • The latest audited accounts and accurate management accounts.
  • An integrated financial report that incorporates monthly balance sheets, profit and cash projections for a minimum of 12 months.
  • A turnaround plan that articulates the reasons for underperformance and the steps to take the business from current performance to growth. 
  • Conservative, realistic and achievable projections. 

A robust and complete business case will be looked more favourably upon by the challenging credit committees, who will also appreciate your plans to improve performance and avoid repeat lender fatigue. Lenders value security and will want to know what their exit route is if your turnaround doesn’t work.

The best advice before going to the market is that you run through the business case with your advisors who will be able to: 

  • Advise on whether you will have enough working capital to achieve your projections. 
  • Advise which lenders in the market are best suited for your refinancing opportunity.
  • Introduce you to prospective financing partners. The fact that your advisors are making the introduction will give you more credibility than if you make the approach yourself.

Get these basics right and the refinancing process will be a challenging but rewarding one.

David Gilbert is a business restructuring partner and refinancing and rescue finance specialist at BDO, running the firm's project.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

When spying on your staff backfires

As Barclays' recently-scrapped tracking software shows, snooping on your colleagues is never a good idea....

A CEO’s guide to smart decision-making

You spend enough time doing it, but have you ever thought about how you do...

What Tinder can teach you about recruitment

How to make sure top talent swipes right on your business.

An Orwellian nightmare for mice: Pest control in the digital age

Case study: Rentokil’s smart mouse traps use real-time surveillance, transforming the company’s service offer.

Public failure can be the best thing that happens to you

But too often businesses stigmatise it.

Andrew Strauss: Leadership lessons from an international cricket captain

"It's more important to make the decision right than make the right decision."