Alternative finance for businesses in distress

What’s the answer if the cash flow has hit a brick wall and the bank has withdrawn any possibility of re-financing, or if your invoice discounting factoring options have disappeared? Even if the situation seems hopeless, there are still options open to you – but it’s best to know about them in advance rather than trying to find out what can be done at the eleventh hour. Experienced investor equity specialists like Beer and Young can help distressed companies find their way out of the darkness and back into the light.

Finding your way out of the woods
With the UK now formally in a recession and the real possibility of a prolonged downturn growing, many business owners will be asking what impact this will have on them and their ability to raise money when they need it. It has become extremely tough for all but the largest and most successful firms to obtain new bank funding. The government has tried to address the situation by re-capitalising the banks but there is no guarantee of how much of this cash will eventually flow into small companies – or when they will get access to it.

The good news is that there are alternatives and one of the best and easiest to access is investor equity. By far the largest investor network is managed by Beer & Young, a City of London-based Company, now in its eleventh year of trading, with a nationwide team of associates who are experts in raising equity finance. This network comprises over 1,000 private investors (sometimes referred to as Business Angels), all of whom have an appetite for investing in distressed and turnaround companies or those who have an urgent need for new capital

And their appetite to invest has not been quelled by the current downturn – indeed, they very much see the current situation as one in which many good new opportunities are likely to emerge. Over the past six months, investment sums ranging from £100,000 to £3 million have been made available.

Because of the scale of the network there is a solution for trading companies across all sectors nationwide. Typically these firms have turnover of £1 million up to £20 million.

Equity investment may not be for everyone of course. One of the perceived downsides is that the business owner has to give up some equity, which may be painful. But others see this as more palatable than no solution at all. After all 100 per cent of nothing doesn’t amount to a lot! Investors are looking to back committed management teams and generally do not want to take over the company. Hence it is rare that they will require a majority shareholding.

In addition to injecting new capital they can also add huge value in terms of their experience and contacts in the industry they are investing in. They are high net worth successful business people.