TURNING TROUBLED DEBTOR STATUS INTO AN OPPORTUNITY

When you're standing at the end of a long line to order a beer, as I experienced this past weekend at the Mills River Brewery, you start to notice something interesting. As we inch closer to the front, we instinctively begin to prepare: mentally confirming our beer choice, ensuring our payment method (cash or card) is ready, and getting our parched mouths primed to confidently request that refreshing micro-brewed brown ale. The last thing anyone wants is to fumble at the counter, allowing room for the server be attracted to another patron who is ready. Preparation becomes key to making sure our wait is worthwhile and our thirst is quenched without a hitch (it was). Similarly, as a business owner or CEO, recognizing a pressing need to grab strategic commercial capital under favorable conditions, to stay competitive, it is crucial to be well prepared for a capital raise. Likewise, you can't afford to ignore the preparation needed, despite the day-to-day demands of running your business as the year slips by. As economic conditions improve (better interest rates, relaxed loan constraints), the line for capital will inevitably grow longer. Being ready and positioned for a capital raise ensures your business can seize the best rates and conditions promptly. In both scenarios, preparation is key to achieving satisfaction and success. CORNER can help you with that preparation and raise while you focus on your important core business. 96.8% - I WANT THAT LEVEL OF CERTAINTY! As mentioned in my "EOY Countdown Reminder" article ( https://www.linkedin.com/pulse/august-1st-eoy-countdown-reminder-francisco-becerra-6ozdf/ ), interest rates are coming down. The Federal Reserve Bank of Atlanta now shows a 96.8% market probability of a rate hike or cut by 2024-09-18. (It would be nice to have that level of certainty about anything.) Part of the motivation for lowering rates is the criticism associated with the sudden drop of the S&P 500 and the corresponding spike in the CBOE Volatility VIX index. (See graph.) The resulting finger-pointing towards the central bank will likely place additional pressure on lowering rates sooner rather than later. At that time, businesses, whether they realize it or not, will be standing at the end of a long line waiting to order a fresh refinance, extend their credit lines, or find a new lender. CORNER (www.cornerfinance.com)can successfully guide business owners and CEO’s in managing their place in line, even while they focus on your important core business.

I remember closing a complex strategic capital transaction on the last business day of the year while traveling on Amtrak from Miami to New York, multiple teams coordinating over a phone-bridge to confirm every detail, contracts, guarantees, signatures—where one error could have derailed and delayed funding until the following year, requiring a complete redo of financial statements and likely all documents. Fortunately we concluded successfully. Don't let that stress be your experience.  With interest rates expected to drop in September and lending constraints easing, business owners, CEOs, and CFOs must act swiftly. To secure optimal financing conditions, consider outsourcing your strategic capital raise. This proactive approach will help navigate busy lenders, technical delays, and avoid rushed processes, ensuring you don't miss out on favorable terms or the opportunity to access capital this year. WHATS GOING ON? WHY THE URGENCY? The Federal Reserve central bank chief Jerome Powell sent a strong signal on July 31, saying that “policymakers may be ready to reduce borrowing costs as soon as their next meeting in September, with recent data adding to their confidence that inflation is coming into line with their 2% target”1 The urgency is that the lowering of rates happens late in the calendar year. Considering typical transaction times, potential delays, and the rush of companies seeking to refinance or secure capital, the window of opportunity is tight. Those who take early initiative and are well-prepared will have the best chance to benefit. As I mentioned in my previous article, PREPARING FOR GOOD TIMES, ( https://www.cornerfinance.com/preparing-for-good-times ) now is a good moment for company owners, CEO’s and CFO’s to start redefining their relationship with their funding source. Seeing this change in rates and conditions can be a good opportunity to lower the cost of capital. This will allow companies to improve their strategic competitiveness and agility while bringing back growth plans that were placed on hold during the tight conditions. The challenge lies in the end-of-year rush as numerous companies seek funding simultaneously. Our good friends, the underwriters at banks and non-banks will likely be swamped with funding requests. Their priority for awarding strategic capital will be companies that act early and come well-prepared. TYPICAL LOAN PROCESSING TIMES Based on our experience, loan transaction times until funding often exceed expectations. Business owners, CEOs, and CFOs underestimate the complexity of the loan application process, especially when tackling it alone, while they also manage core business challenges. Here are the average times to funding for different types of commercial loans. Please note, these times are in business days and do not include the necessary document preparation time prior to entering the market. Generally, larger amounts or more complex guarantees require longer funding times. TERM LOANS Details: Involve detailed financial analysis and collateral evaluation, which can lengthen the process. Due Diligence: 20-45 days - Financial analysis, credit checks, collateral evaluation, and business plan review. Contracts: 15-20 days - Drafting, negotiation, and signing of loan agreements. SBA LOANS Details: They have additional layers of approval from both the SBA and the lender. Multiple sets of eyeballs that each have their own criteria, who have to analyze and process loan documents, which can easily extend the timeline. . Due Diligence: 30-60 days - Includes lender’s review and SBA approval process, requiring detailed financial documentation and business analysis. Contracts: 20-30 days - Includes SBA documentation, loan agreements, and compliance requirements. COMMERCIAL REAL ESTATE LOANS Details: These loans require thorough property appraisals, environmental assessments, and more extensive underwriting. Due Diligence: 40-90 days - Property appraisal, environmental assessments, title searches, and financial analysis. Contracts: 20-30 days - Drafting and negotiation of loan and mortgage documents, plus any additional legal requirements. BUSINESS LINES OF CREDIT Details: May have quicker approval processes as they are often secured by the business’s assets or receivables. Due Diligence: 10-30 days - Review of business financials, credit history, and asset evaluation. Contracts: 10-15 days - Simplified agreements due to the revolving nature of credit lines. EQUIPMENT FINANCING Details: Depends on the type and complexity of the equipment (think, airplane), since the equipment itself serves as collateral. Due Diligence: 10-45 days - Equipment valuation, financial analysis, and credit checks. Contracts: 15-20 days - Includes lease or purchase agreements and loan documents. INVOICE FINANCING Details: Generally quick because it is based on outstanding invoices rather than long-term financial projections. Due Diligence: 5-10 days - Verification of invoices and creditworthiness of the business. Contracts: 5-10 days - Short-term contracts typically outlining the terms of the advance. CONCLUSION Business owners, CEOs, and CFOs aiming to refinance or secure strategic capital this year must act now to ensure the best terms and conditions. With interest rates set to drop and lending constraints easing, lenders will be busy, making timely action crucial. To avoid suboptimal results and unnecessary stress, consider outsourcing the strategic capital sourcing process to start effectively engaging lenders immediately. This approach will allow you to focus on your core business while ensuring a well-managed, competitive capital raise. Take control of your capital sourcing today to secure the best outcomes tomorrow. Please visit our website at www.CORNERfinance.com

If you had a crystal ball with a high degree of certainty, what would you do now to take advantage of a forward-looking vision?

See article at CFO.com 88% of workers struggle to meet basic living costs: surveycfo.com

Not every relationship between a company and a funding source works every time. Matching your company to the right new funding source requires a well defined methodology.

LEVERAGE NON-BANK CREDIT TO OFFSET TRADITIONAL FINANCE RISK

Strategic financial planning and risk management are imperative for companies to navigate these turbulent times effectively.

Businesses must adapt by implementing robust financing strategies to navigate this prolonged period of high financing costs.

Strategic capital sourcing helps mitigate the risk from capital that does not support the company's growth or operational strategies.

A Successful Cfo Must Recognize And Proactively Manage These Blind Spots

Navigating these challenges requires the CFO to employ strategic thinking

Getting Cash Flow Stability and Financing Optimization right will reflect on the capabilities of the CFO and serve as a reference for their future business growth opportunities.

Meeting summary

Excited to announce that tomorrow, April 17th, I will have the honor of moderating a discussion panel at the 2nd Aircraft Financing and Investment Opportunities Roundtable, organized by Panagiotis Panagopoulos , CEO of Aeropodium. The topic of our discussion will be "Aviation Financing and Investment Opportunities." I'm thrilled to draw insights from distinguished panelists: Nick Houseman , Walter Valarezo , Mike Kahmann , Jay Faria and Jacob Agnew , who will share their years of hands-on experience in both commercial commercial and business aviation financing transactions. This roundtable promises to be a deep dive into the dynamic world of aviation financing, where we'll explore current trends, challenges, and opportunities shaping the industry. Some questions that will be asked: * Discuss the impact of technological advancements in aircraft design and manufacturing on investment decisions and asset valuation in the last 20 years? * What role does environmental sustainability play in financing and investment decisions today, particularly with the rise of eco-friendly aircraft technologies? Where do you see it going in the next 10-20 years. * Looking forward, what innovations in financial products are anticipated to meet the evolving needs of the aviation industry, particularly for business jets and commercial aircraft? For an agenda, visit: https://lnkd.in/eENznpZs

Right now your company is highly likely to be paired with a funding source that is the wrong-match.

It is imperative that a proactive methodical search for strategic funding partner be done before the company’s status deteriorates to troubled debtor, a label that can undermine the ability to access the best funding sources.