Bridging Finance / Commercial Loan Notes/ SME Funding

Bridging Finance and Commercial Loan notes have become more commonplace in Ireland over the past number of years. This is predominantly because many small medium enterprises (SME’s) have been through challenging times and as a result may have impaired their credit ratings along the way. The result is a lack of lending options available as lenders are restricted to provide funding to many borrowers who do not have strong credit ratings.

Some of the opportunities which these individuals and SME’s have are very strong. In many instances it is these credit impaired individuals who are best positioned to capitalise on the opportunities to hand. There is often hidden value available to the incumbent borrower or SME. At Beacon Capital we try to assist unlock that value by structuring facilities that work for both borrower and lender.

It is becoming increasingly commonplace for borrowers to experience opportunities to acquire an asset back from a new debt owner, usually referred to as a vulture fund who has acquired the debt from the original lender. Being in a position to make a full and final payment can provide the borrower with a number of advantages such as a substantial write off of debt, reflecting the new market value, and an ability to refocus energies on the business. This is often an excellent opportunity for a borrower to regain control of their financial position.

Obtaining the supporting funding for these type of buybacks is challenging as there is no obvious place to source it. Beacon Capital have identified an opportunity to work with a group of funders. These range from High Net Worth Individuals and bespoke funds. The consistent trait is that they are flexible, commercial and open to taking calculated risks. Generally speaking the loan notes need to be in excess of €1m in order to be commercially viable, however in certain circumstances where the offer is compelling enough, loan notes of €500k would be considered.

Beacon Capital always consider the most appropriate and competitive financing options available for its clients. At often times senior financing from banks can in fact be the most effective source of finance despite not being evident to the borrower. Beacon Capital have strong connectivity into various funding sources, from senior to mezzanine finance, which allows us to find a solution for a wide range of financing proposals.  

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