The exogenous shock in the spring of 2020 took small and medium-sized enterprises in Germany by surprise. Since then, we have observed many stages of a classic corporate crisis across various industries. The government is attempting to address the ongoing costs faced by companies through loans and—in some cases with a delay—bridge financing. The already strained liquidity situation is becoming increasingly challenging due to rising raw material prices, higher freight costs, and longer delivery times. And trouble also looms with the publication of the 2020 annual financial statements, as weaker credit ratings are likely to be the norm.
So what should you do if support from your primary banks and the KfW is no longer sufficient, or if negotiations are taking too long? – Explore alternatives!
For both traditional working capital financing and the financing of M&A transactions, there are alternatives that sensibly complement the existing financing structure and place it on a broader footing. If we work our way down the asset side of the balance sheet from the top, “sale and lease” or “rent back” arrangements come into focus first, whereby financiers focus on fixed assets such as machinery and real estate and provide additional financing against the corresponding collateral.
Another tool is factoring, in which providers purchase customers’ receivables in part or in full, insure them, and shorten payment terms.
A third, extremely fast and flexible option is direct lending, which creditshelf also offers. Providers typically do not require additional collateral here and can reach a credit decision and disburse funds within a very short time.
The higher risk is reflected in an adjusted interest rate, which is, however, quickly mitigated by the additional opportunities for liquidity.
