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Some lenders will have a reduced appetite and capacity to lend to smaller businesses due to higher regulatory costs which reduce loan profitability, they often need help with exit management. Rationalising loan book exposures can involve ending long-term borrower relationships, including both performing and non-performing borrowers. Furthermore, while historically most of this work comes from banks, alternative lenders are also starting to selectively rationalise loan books. 

When a lender wants to end a borrower relationship - whether at maturity, during the life of a facility or because a borrower behaviour or specific events (such as asset sales) have driven it - it can create challenges that require expert intermediation from the lender’s adviser. In most cases, while the lender seeks a swift loan exposure reduction, the impact on the borrower can lead to disruption in its operations, potential loss of contracts and sales and potentially higher loan costs from a new funding provider. 

In this regard, BTG Advisory’s Lender Advisory team can help. When mandated, our team manage the entire process to either work with both lender and borrower to construct a repayment plan or refinance the incumbent loan via a new funder. Regardless, BTG Advisory will ensure the highest levels of transparency and the best possible mutual outcome for both parties. There are no one-size-fits-all solutions. Sometimes a simple six-month extension on a maturing loan is sufficient, whereas other long-dated maturities may require a loan sale to resolve swiftly.

We conduct thorough due diligence to understand the borrower’s business, historical and forecast financial performance, prospects/challenges, and assess their debt capacity, security, and potential structure financing options. This information will be distilled into an Information Memorandum to provide sufficient detail to potential lenders/loan buyers to facilitate a swift refinancing or loan sale. By facilitating a quick, transparent, and informed process, we unlock potential exits for the lender to create mutually beneficial outcomes. 

More specifically for borrowers, we help mitigate the disruptive impacts of a lost lender relationship, working to ensure all relevant financial information meets lender requirements (including sustainability metrics and additional compliance reporting) to maximise a successful outcome. 

If it looks like there may not be a viable refinance option, BTG Advisory is well placed to run an equity process instead, or in parallel to the refinancing process. This can help source new owners or investors for the business to help facilitate repayment of the existing financing arrangements. We are increasingly seeing borrowers, in a high interest rate environment, being prepared to accept some equity dilution to de-risk/de-leverage the business. 

Deal Success

The detailed review undertaken by BTG Advisory supported a positive recommendation to enable the business to refinance with the lender

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Pre-lend review to support business refinance

How we helped:

  • Pre-lend review conducted for business looking to refinance
  • Produced report on current trading, balance sheet position, management strategy and forecast
  • Resulted in positive recommendations being made to the bank following our review
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A detailed and thorough review undertaken by BTG Advisory concluded with a positive outcome for the bank and business

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Lender appointed Independent Business Review

How we helped:

  • Conducted independent business review on behalf of the bank
  • Included an in-depth understanding of the business, customers and supply chain
  • Recommendation in favour of the bank extending existing overdraft
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The outcome of this portfolio recovery assignment yielded excellent results for the bank, providing an outstanding value added service

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Portfolio recovery services for high street bank

How we helped:

  • Reviewed approximately 400 cases ranging in size, complexity and bank debt
  • Collected over £25m in first year from a standing start on an SME-focused portfolio
  • Allowed the bank to write-back monies that were initially thought to be irrecoverable
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BTG Advisory’s extensive knowledge of the healthcare sector helped highlight issues facing the provider and provide the most appropriate recommendation to help stabilise the business

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A solvency review for domiciliary care provider

How we helped:

  • Identified accounting issues and a need to refinance to support company growth
  • Recommended a new accountant and sought offers for refinance
  • Provided advice to stabilise the business
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The team undertook a detailed analysis of the school which facilitated a successful strategy to be put in place to ensure a satisfactory return for the lender

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Independent review facilitated a satisfactory return for the lender

How we helped:

  • Appointed by bank to undertake Independent Business Review 
  • Implemented a successful exit strategy via solvent route
  • Secured a suitable return for the bank
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