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Business Refinancing
Business Refinancing in Chicago
Managing cash flow and securing dependable banking partners is the foundation of success for any business, regardless of industry.
From time to time, it is prudent for organizations to seek out alternative sources of bank funding. The knowledgeable partners at SOGID® Management Consultants can utilize our three decades of experience to help your company secure the alternative funding sources that will meet your specific needs.
Common Reasons for Business Refinancing
Here are some of the most common reasons that companies seek out alternative financing sources.- An overextension of credit with current banking relationships.
- Desire for lower interest rates.
- A need for recapitalization.
- Additional funds needed for a merger or acquisition.
- Plans to expand a physical location.
- Capital needed to reach new markets.
Understanding Business Refinancing
Every business has their unique story to tell. The SOGID™ team takes the time to get to know our clients and their businesses, so we can create an alternative source funding strategy that address your exact requirements.
The Pillars of a Successful Refinance Source Strategy
Our market proven process of matching your business with the right alternative financing partner involves these critical steps:
- An overextension of credit with current banking relationships.Understanding your business and industry, so we can tell your unique story to various alternative funding sources.
- Conducting a comprehensive review of the company’s current financial situation, as well as an evaluation of past financial records.
- Introducing your organization to new alternative funding sources.
- Negotiating on your behalf to secure the most favorable refinancing terms possible.
Types of Business Refinancing
There are various types of alternative refinancing sources available in the marketplace today, including: Debt Refinancing and Equity Refinancing.| Type of Refinancing | Description | Advantages |
|---|---|---|
| Debt Refinancing | Involves taking a loan from a financial institution to be paid back with interest. |
1. Ownership Retention:
The ownership of a company does not change with a traditional debt refinancing loan agreement. 2. Management Control: Just as the ownership of an organization is not affected by this type of loan arrangement, the management structure, and the decision-making process of key leaders remains autonomous. 3. Tax Deductibility: In most cases, the interest paid on a debt refinancing loan is tax deductible. |
| Equity Refinancing | Raises capital by selling a portion of the company, without incurring additional debt. |
1. No Additional Debt 2. Additional Expertise & Resources: The inclusion of new partners into an organization brings fresh eyes, and expertise that did not exist previously. 3. Potential Additional Capital Sources: Current investors who experience positive outcomes with an organization are more likely to infuse additional capital into the business. |
Refinancing Strategies for Different Business Stages
Mature Phase
Usually, mature companies are in the best position to find both debt or equity refinancing alternatives, as they have established themselves in the marketplace, have survived over time and have documented financial performance data.
Growth Phase
Companies with an established track record have the option of both debt and equity refinancing. Alternative funding sources and investors are usually more comfortable with a company in the growth phase, as it has data to help predict its performance in the future.
Startups
Start-up businesses normally will take a loan from a financial institution, or seek a capital infusion from investors. However, debt refinancing is more challenging due to the risks involved in the viability of a new business.
Navigating the Business Refinancing Process in the Chicagoland Area
Finding and securing alternative funding sources has proven to be a successful strategy for many businesses. However, choosing the right refinancing partners can be challenging. Let SOGID™ Management Consultants put our three decades of refinancing knowledge and experience to work for your organization. Together, we can find alternative funding source solutions to meet your unique needs.© 2024 All rights reserved