As businesses cautiously commence revised or new strategic initiatives, there is a pent-up demand from organisations looking for funds to execute on strategies they may have agreed upon at a board level prior to the pandemic.
For many businesses, the result of COVID-19 meant strategic growth opportunities were put on hold. Simultaneously, businesses were forced to re-examine what is vital for operations and what is not.
Organisations may have consolidated assets and refined their business model - some due to repositioning, others out of necessity. What remains unchanged however, is the idea of what banking institutions are willing to accept as collateral for a loan. This creates significant incompatibility where the ‘bricks and mortar’ assets traditional lenders require as security may no longer align with a businesses' growth strategy.
The ‘best’ financial product would then mean that strategy is not compromised or undermined in order to secure funding - flexible financing delivers said products.
Flexible financing as a solution
Flexible financing is built on negotiation and does not adhere to the traditional property-focused mentality between large financial institutions and borrowers. Now being a crucial time to initiate growth strategies, means professional service providers (accountants, stockbrokers, financial advisors, corporate advisors) and their intimate knowledge of the financial positions of businesses can assist in moving towards alternative funding, which are not reliant on bricks and mortar security.
In the field of flexible financing, non-bank lenders have become an increasingly attractive solution for ASX listed businesses looking for acquisition financing, growth capital and other working capital requirements. Disrupting the traditional lending landscape is the non-bank platform, ORB Alternative. For companies seeking funding, ORB Alternative offers products to meet their requirements using varying loan structures which utilise the value of collateral beyond ‘bricks and mortar’.
What loan structure is best for your business?
Flexible financing may be the better option for your business. ORB offers 4 varied structures to meet funding needs.
1. Converting note
A Converting Note is a loan structure with a nominal coupon payable up to the conversion date. The ORB Alfa product is structured as a Converting Note that results in a conversion to equity from the funder providing there has been no default on the coupon payment. The ORB Alfa product can be used as a standalone solution to capital requirements or to supplement the current equity raise of the ASX listed company for amounts between A$1M to A$25M. To ensure that a flexible financing solution is achieved the final terms of each ORB Alfa are completed upon negotiation between the funder and the ASX listed company with over terms of between 3 to 18 months.
2. Senior debt facility
With ORB Alfa Plus, loans above $25 million are structured as a Senior Debt facilities. The ORB Alfa Plus may also be structured with a payment-in-kind component (PIK). The PIK component allows the borrower to make interest payments in forms other than cash. With this structure, the borrower is able to receive financing without the burden of an all a cash repayment of interest until the loan term has ended. ORB Alfa Plus can be utilised for funding working capital growth or acquisition opportunities for amounts above A$25M over a term of 12 to 36 months.
3. Equitable mortgage in shares
Through an equitable mortgage structure, ORB 2020 is a loan for corporate borrowers that takes security over their underlying ASX listed security. While the security structure held by the funders of ORB 2020 is similar to that of a traditional “margin lender”, the loan may be structured without “margin call” rights to the funder. The respective maximum loan to value ratio applied by the funders an ORB 2020 loan will be tailored to each specific applicant and circumstance. ORB 2020 secures funding against ASX listed stock with terms from 3 to 48 months for amounts between A$250K to A$25M.
4. Non-standard and special situations
For funding requirements which do not suit the previously mentioned structures. ORB Delta is structured by the individual funder on a deal appropriate mix of security and/or equity, providing unlisted companies with an alternative funding solution for capital and acquisition growth strategies.
Traditional lending options are falling behind in the era of new loan structures. By considering how flexible financing can enable strategic growth, you can assist in making the right funding decision for your business.
Get in touch with ORB today to find out more.