What to do when a funder withdraws from the market?

You arranged finance for your SME client on exceptional terms, but now that the funder has withdrawn from the market what should you do next?

As you will appreciate the commercial finance market is constantly evolving, and what may have been available in the past may not be available now. It is important to manage your client’s expectations and make them aware of the current market conditions.

Everyone is aware of interest rates, inflation and the banking crisis in the US and Europe.

And everyone is aware of recent spectacular corporate failures in the transport and construction sectors.

Economic headwinds and industry sector turbulence create uncertainty and hesitation among lenders, impacting the terms if not the availability of funding altogether.

So what now?

Act fast and find an alternative funder with the right track record and ability to move quickly to give your client the support they need moving forward.

Obviously, it’s important to understand the impact of the lender no longer funding your client’s financial situation.

Once you have a clear understanding of that, communicate with your client in a timely and transparent manner. They are going to feel vulnerable which they are. They are worried about being manipulated and a solution will seem very complex.

Bonus Tip:

Don’t forget to check the standing of any replacement lender.  Are they subject to the kind of external scrutiny that ensures their longevity? APRA regulates banks.  Some non-banks and managed funds (such as Hermes) carry an Australian Financial Services Licence (AFSL). This indicates that the funder is audited and subject to the scrutiny of the regulator as well as other third parties.