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What is business turnaround and restructure finance?

Looking to get your business back on track? Find out what’s involved with business turnaround and restructure finance.

Trying to rescue a struggling business can be a harrowing experience, with the threat of insolvency lurking behind every business decision. Financial troubles in your company are often caused by external factors that may be beyond the control of directors or shareholders. Whatever the reason, when problems begin it is important that the company acts calmly and quickly.

If you are trying to turn your business around, there are financing options available. Learn more about them, and if it could be an option for your business, in this guide.

What is business turnaround finance?

Some lenders in Australia specialise in restructure and turnaround finance. These services can provide you with the necessary funds to keep yourself trading, and also help you identify the changes that will need to be made to recover. Restructure finance can also help you finalise trading while minimising further loss to the business.

Prospa Business Loan Offer

Prospa Business Loan

  • Borrow up to $250,000
  • Same-day turnaround
  • Repay early without penalty
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100% confidential application

Prospa Business Loan Offer

The Prospa Business Loan allows you to borrow up to $250,000 for your business needs. The loan is available for new or existing business needs and features no upfront fee and no fees for early repayment.

  • Interest rate type: Variable
  • Application fee: $250 establishment fee
  • Minimum loan amount: $5,000
  • Maximum loan amount: $250,000
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Business lenders you can compare

Rates last updated November 24th, 2017
Name Product Min Loan Amount Max. Loan Amount Loan Term Application Fee Product Description
Prospa Business Loan
$5,000
$250,000
0.25 to 2 years
$250 establishment fee
Special offer: No repayments required until Monday 8 January 2018 for business loans that are settled between 20 November 2017 and 31 December 2017. Conditions apply.
NAB QuickBiz Loan
$5,000
$100,000
1 to 3 years
$0
An unsecured business loan from $5,000 that can be processed in 1 business day.
Spotcap Loans
$10,000
$250,000
1 year
$0
Take advantage of a fixed interest rate and no upfront fees on this business loan, available up to $250,000. Note: Business must have been operating for at least 18 months and have turnover over $200,000.
Moula Business Loan
$5,000
$250,000
0.5 to 1 years
$0
Small business loans of up to $250,000 approved and funded within 24 hours. Transparent fees and rates. Note: Business must have been operating for at least 12 months and have monthly sales of at least $5,000.
GetCapital Flexible Business Loan
$5,000
$500,000
0.25 to 1 years
1.5% to 2.5% initial draw down fee
A flexible business loan that allows you to earn Qantas rewards points. Note: Business must have been operating for at least 9 months and have monthly sales of at least $10,000.
Sail Unsecured Business Loan
$5,000
$100,000
1 year
2.5% origination fee
Take advantage of a convenient business loan available from $5,000. Bad credit applicants considered. Note: Business must have been operating for at least 6 months and have turnover over $50,000.
RateSetter Business Loan
$10,000
$150,000
0.5 to 5 years
0.5%
Apply for up to $150,000 and choose between a secured or unsecured loan. Note: Business must have been operating for at least 2 years and have turnover over $250,000.
businessloans.com.au  Flexible Business Loan
$5,000
$500,000
0.5 to 1 years
1.5% Initial draw down fee
A 100% online business loan with amounts available from $5,000. Flexible eligibility criteria and transparent rates and fees.

Compare up to 4 providers

What are my options?

Depending on the lender you opt for, restructure finance can provide you with a selection of potential routes to go down:

  • Restructuring support

A restructuring company works with you to analyse all aspects of your business, identify areas for improvement and find where profitability can be increased. It can also provide support and advice for stakeholders who may be unsure of what to do next.

  • By acting early, you can potentially save the company from taking more drastic action later on.
  • In the wrong hands, restructuring can be a frustrating, expensive and an ultimately unsuccessful pursuit.
  • Debt restructuring

If you are consistently falling behind with your payments, you can opt for debt restructuring to have the company help you negotiate with creditors to give you more time to pay or find alternative funds and payment plans.

  • Companies that maintain regular communications with their creditors can be optimistic about the chance of successful negotiations, especially with the backing of an experienced restructuring service.
  • Ultimately the fate of your company lies in the hands of creditors who will want guarantees of repayments as soon as possible.
  • Cash management

For a business feeling the effects of a sudden drop in sales, a short period of assisted cash management can help ease the minds of stakeholders and creditors. This will often include methods such as improving the company’s forecasting models and reviewing its cash requirements and management options.

  • This option provides an efficient means of highlighting problems within your company and identifying solutions.
  • Cash management will do little to confront existing debt problems or deal with larger issues created by falling revenue.
  • Voluntary administration

An independent administrator will be appointed by the director to assess the likelihood of the company being able to continue trading. This will usually involve meeting with creditors and attempting to come to an agreement regarding missed or overdue payments.

  • This is easy and inexpensive to carry out
  • It provides a comprehensive review of the company that can be used to identify problems and strengthen for the future.
  • Attempts at voluntary administration are often misguided and requires expert guidance to have any chance of success, with only a fraction of businesses saved.
  • Receivership

This involves the bank or another influential creditor appointing a receiver with the sole objective of recouping funds to settle the company’s debts. This can sometimes be achieved by selling assets, but may require the sale of the entire company.

  • The bank can go a long way to steadying the ship and taking back control of a chaotic business.
  • Liquidation is rarely avoided, with little incentive for the receiver to do more than reclaim creditors’ money as quickly as they can.

What to know before you apply

The avenue you choose will depend on the current status of your business and what you need out of the loan. Whatever you decide to do, there are a few issues that should be kept in mind:

  • Ask your accountant for their thoughts but always back yourself up with a second opinion. It’s a good idea to do some additional research before you make a decision.
  • There are many companies offering restructuring services online. Your best chance of success will be with an experienced and recommended firm.
  • Watch out for upfront costs and always agree on a set price for the company’s services before you start.

Picture: Shutterstock

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