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04 Nov 2020

Private lending—The current state of play


2 min

Local lending markets ‘bouncing back’ with renewed liquidity.

In this latest instalment of our private lending article series, we explore the importance of developing a clear strategy for long-term funding for businesses looking to secure their future survival.

While the COVID-19 pandemic is still being felt in the economic markets around the world, finance players are beginning to see increased liquidity within all sectors of the Australian funding market. Capital and debt advisory specialists have noted that banks and credit providers are not only able to manage their customers’ corporate forbearance requests such as loan amendments, deferrals and extensions, but also have the liquidity to accommodate select corporate refinancing applications.

Within this environment, we’ve seen business decision makers shift their focus from short-term financing to consider the bigger picture and create a long-term funding strategy. With Sebastian Paphitis of Ernst & Young’s assistance, we have summarised below the key elements to consider when creating a plan to manage your business’s capital.

Elements of a successful capital management plan

  • Re-evaluate your plan at regular intervals and ensure it accurately reflects the current economic climate. There should be some stable goals and capital sources but allow room for flexibility to respond to changes in the environment.

  • Communicate, effectively your future funding objectives and planning process to all key stakeholders to ensure everyone is onboard and that these objectives filter down into other areas of business planning and management.

  • Incorporate analysis into your financial decision making. Consider as many likely scenarios as you can so that you can make an informed decision.

  • Consider all your options. There are many ways to raise and manage capital. You could utilise existing banks or diversify through other lenders. Also consider equity to debt raising.

  • Investigate the terms of your current facilities and explore the option of extending them beyond the short-term impact of current economic conditions.

To learn more about the private funding market and how you and your clients can access it, please contact your local Worrells partner.

Thanks to Sebastian Paphitis, Partner and Joint National Head of Capital & Debt Advisory at EY for his insights and assistance.

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