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BANK WORKOUTS

Find a financing path forward when your bank relationship is under pressure.

Evaluate asset-based alternatives when covenant issues, reduced borrowing availability, or a bank-directed exit put existing financing at risk.

DEALS WE SUPPORT

When Your Bank Relationship Is Under Pressure, New Options May Still Be Within Reach

A company’s relationship with its current lender can become difficult when financial results change, covenants are breached, credit availability contracts or the bank elects not to renew a facility. The business still has customers to serve, payroll to meet and suppliers to pay, and it often still has valuable assets.

Alternative asset-based financing may provide a path to evaluate. Great Elm Commercial Finance reviews those assets and, where the opportunity fits, can provide financing to replace or supplement an existing facility. Great Elm acts as a potential lender; it does not represent borrowers in negotiations with their bank or provide legal advice.

Professionals reviewing financial documents during a lender discussion

COMMON FINANCING CHALLENGES

Common Sources of Lender Pressure

Lender pressure rarely arrives all at once. These are the situations that most often lead a business to look at a different source of financing.

When results fall short of loan covenants, or reporting requirements become difficult to meet, a lender may tighten terms, restrict borrowing or ask the company to find another source of financing.

A lender may reduce the amount a business can borrow against its assets, leaving little room under the current facility and putting pressure on cash for payroll, suppliers and day-to-day operations.

A facility that is coming due, or that the bank does not plan to renew, may need to be refinanced or replaced within a specific timeframe.

A bank may set conditions, deadlines or reporting obligations while a credit is being worked out, and those requirements shape how quickly and in what form a transition can happen.

FINANCING CONSIDERATIONS

What a Workout Financing Review Must Resolve

Having seen why the pressure arises, the next question is what a replacement financing arrangement must accomplish. These are the points Great Elm works through with the borrower.

  • The current lender’s position and the amount of outstanding debt.
  • Maturity dates, forbearance terms and any other deadlines the bank has set.
  • Payoff and consent obligations, including release of the bank’s liens.
  • Eligible collateral, such as receivables, inventory, equipment or real estate, and the liens already on it.
  • What a replacement facility must provide, whether term financing, a receivables-based line or both.

RELEVANT FINANCING SOLUTIONS

Financing Options for a Bank Workout

Great Elm offers two financing solutions that most often fit a business replacing or supplementing a bank facility. Availability depends on the borrower’s assets and underwriting.

Secured Term Loans

Potential collateral-backed replacement financing, supported by eligible assets such as inventory, machinery, equipment or real estate.

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Ledgered Line of Credit

Receivables-supported revolving financing where ongoing working capital is the primary need, subject to receivables eligibility and underwriting.

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RECENT DEALS

Recent Great Elm Financing Transactions

Explore a selection of recent Great Elm financing transactions. They show our general lending experience and were not necessarily bank workouts.

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FREQUENTLY ASKED QUESTIONS

Bank Workout Financing FAQs

Answers to common questions from businesses whose bank relationship is under pressure.

Replacement financing may be considered while a bank relationship is under pressure, subject to payoff terms, existing liens, documentation and Great Elm’s underwriting. Whether it fits depends on the company’s assets and circumstances.

Generally, a new lender taking collateral needs the existing lender’s liens on that collateral released or addressed as part of the payoff and closing. The requirements depend on the existing loan documents.

Defaults and forbearance terms are part of what an alternative lender reviews. They are typically resolved through payoff of the existing facility or through terms agreed with the current lender; Great Elm is a potential lender and does not negotiate for the borrower or give legal advice.

Discuss a Bank Workout Financing Opportunity

Tell us about your current credit arrangement, any lender restrictions, your deadlines and the collateral available. Great Elm can review the financing situation and potential lender-transition options.

Contact Our Financing Team

Tell us about your business and what you’re looking to finance. A member of our team will follow up to discuss your needs and potential next steps.