What Is Recapitalization Financing?

by Crestmark 12. September 2012 06:15

There are many different ways to fund a business. Starting out, you'll have the option to lean heavily on venture capital or similar investment vehicles, but you may also choose to finance through more traditional loans, or potentially even to self-finance. But as your business develops, you may discover that your initial financing method isn't the one that best suits your current needs. In this kind of situation, it'll be time to look at recapitalization financing.

The Funds You Need To Restructure

Recapitalization financing is, at its heart, a way of re-organizing the way the finances of your company are structured. This can mean consolidation, but it often means adapting payment structures to better fit your current method of production. For example, it could mean switching from a more debt-oriented structure to a line-of-credit oriented one.

Changing Your Business Capital

At Crestmark, we often help our clients transfer to lines of credit as their main source of business capital. We offer four main types of line of credit. The first is an asset-based line of credit, which is secured by inventory and/or receivables. Accounts receivable financing is another common choice. This kind of line of credit is secured purely by invoices with every invoice being considered individually. Finally, the last two common options are both types of invoice factoring. Factoring offers flexible financing that functions very similarly to a line of credit but is not technically considered one. Under an invoice factoring agreement Crestmark structures your funding facility based on accounts receivable/invoices. The invoices are purchased at a discount to provide immediate availability of funds to your company

If you're interested in learning how Crestmark can assist you with recapitalization, don't hesitate to contact us. We're always looking to help business owners looking for financial solutions. 

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