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What is turnaround finance?

Turnaround finance is funding for a struggling but viable business that needs assistance because of disruptions to cash flow or restrictions on credit.

Many successful businesses experience temporary drops in revenue due to losing a client or another unplanned situation.

Turnaround finance can be viewed as risky, however, when used properly, it can be just what’s required to save your business from becoming insolvent.

Provided your company is still a viable business and its problems and temporary, turnaround finance could be the ideal option for freeing up capital to pay creditors and get your business back on the right track.

When should you consider turnaround finance?

Turnaround finance isn’t suitable for all businesses. To qualify, your company will need to have a proven businesses model and a history of profitability (or at least stable, regular revenue) from its customers.

Lenders offering turnaround finance typically look for successful companies that are temporarily in a bind. Situations such as the loss of a major client or a restriction on another credit source are ideal opportunities for turnaround financing.

Only consider turnaround financing if your company has a history of good results and profitability, as well as a proven business model.

A wide variety of options are available for struggling businesses, from financing to administration.

Turnaround Finance and funding

 Options

Turnaround financing is generally a better option than alternatives in the following situations:

  • Your company is profitable, but has experienced a temporary setback or drop in revenue that’s affecting cash flow, such as the loss of a major client, broken or damaged equipment that needs replacement or a slowdown in sales
  • You have an effective, actionable plan for turning the business around using the money you raise
  • Your company can easily pay back its creditors within the agreed time period
  • Your company has very little resources, despite having regular cash flow and healthy profits

How can turnaround finance help your company?

If your company is under pressure from its creditors and can’t make its payments on time, it could be forced into liquidation. Creditors owed more than £750 can request a winding up petition – a document that forces the liquidation of your business. Obviously, this isn’t a desirable option if you have a viable company that’s simply fallen into hard times due to a cash flow problem.

Turnaround finance allows your business to borrow money in order to pay back its creditors and relieve the pressure that it’s under. When used properly, turnaround financing can help you return your company to solvency and financial stability.

Before considering turnaround finance, it’s important to consider whether you have a viable company. If your business is not profitable and has experienced issues with cash flow for a long time, turnaround financing may not be your best solution.

If you believe your company can continue trading – and even grow its revenue or profits in the future – but needs help escaping a difficult situation, it could benefit from an injection of capital via turnaround finance.

 

Learn more about turnaround finance

We’ve helped hundreds of UK businesses with viable business models and a history of success escape creditor pressure and the threat of insolvency using turnaround financing. If your business is struggling, we’re here to help it make a recovery.


Contact us today for FREE to learn more about how we can help you and your business.

We have a team of advisers who have helped hundreds of businesses around the UK that have faced financial pressures on every scale. You are not alone.

Call us free and in confidence on 0800 599 9656 and together we will sort things out.