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TURNAROUNDS

Keep essential operations moving while your business works toward recovery.

Asset-backed financing may help meet near-term obligations as management executes its turnaround plan and addresses underlying operating challenges.

DEALS WE SUPPORT

A Setback Does Not Close the Path Forward

A company facing operational or financial setbacks may still have valuable assets, loyal customers and a viable path forward. Financing can become an important consideration while management carries out a plan to improve performance and stabilize operations.

Great Elm Commercial Finance supports turnarounds with asset-backed financing, looking at the collateral a company has today and the recovery plan for where it is headed.

Great Elm provides financing for a business in a turnaround. It does not design or manage the turnaround; management and its advisors lead the recovery.

Leadership team planning a business recovery with financial charts

COMMON FINANCING CHALLENGES

Financing Pressures During a Turnaround

Several pressures tend to arrive together. These are the circumstances that most often complicate financing a recovery.

Payroll, supplier payments and other essential costs keep coming due while cash flow is weaker, so near-term liquidity has to cover today's obligations as well as the recovery plan.

Receivable and contract cash timing can be irregular, adding pressure to limited liquidity when customers pay later than the company's own obligations come due.

An existing lender may reduce availability or tighten terms at the moment the business needs funding most.

Management, lenders and advisors must coordinate around deadlines, so a financing has to fit the pace of the recovery plan.

FINANCING CONSIDERATIONS

What a Turnaround Financing Must Account For

Every turnaround is different, but the same questions shape most financing structures. This is what a financing review looks at, and what to have ready.

  • A Realistic Cash Forecast. The near-term liquidity requirement, the budget behind it and when the funds are needed.
  • An Operating Recovery Plan. Leadership experience, the business outlook and the intended use of funds.
  • Eligible Collateral. Eligible assets, their valuations and existing security positions.
  • Existing Lender Obligations. Credit agreements, liens and consent requirements that affect what can be done.
  • Out-of-Court or Chapter 11. Ordinary asset-backed financing is different from DIP financing, which applies only to a company operating under Chapter 11.

RELEVANT FINANCING SOLUTIONS

Financing Options for a Turnaround

Great Elm finances businesses in a turnaround; it does not provide turnaround management or advisory services. Availability of any structure is specific to the transaction.

Secured Term Loans

Asset-backed term financing supported by eligible collateral, which may provide capital to a business executing a recovery plan outside of a court case.

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Ledgered Line of Credit

Revolving financing supported by eligible accounts receivable, which may support working capital where appropriate, subject to the viability of the proposed financing.

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DIP Financing

Court-authorized financing only for a business operating under Chapter 11, subject to the orders entered in each case. Not every turnaround involves DIP financing.

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RECENT TRANSACTIONS

Recent Great Elm Financing Transactions

Explore our recent financing transactions and discover how we're helping businesses access the capital they need to grow and succeed. These are examples of Great Elm's lending experience in general and are not turnaround transactions.

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FREQUENTLY ASKED QUESTIONS

Turnaround Financing FAQs

Answers to common questions about financing a business during an operational recovery.

Asset-backed financing looks first at eligible collateral, then at the business outlook and recovery plan, so declining earnings do not by themselves rule out a financing. Availability and terms are specific to each transaction and approval is not assured.

Eligible collateral, such as receivables, inventory, equipment or real estate, supports the financing. Its type, value and existing liens help determine what structure may be possible.

No. Many turnarounds happen outside of court, and ordinary asset-backed financing can be considered without a bankruptcy filing.

Only when the business is operating under Chapter 11. DIP financing requires court authorization, and its terms and protections depend on the orders entered in the case.

Discuss Financing During a Business Turnaround

Tell us about your company's operating position, recovery objectives, liquidity requirements and available assets. Great Elm can evaluate its collateral, financing obligations and potential lending 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.