Loans for companies in crisis are common in the financial world for those businesses that, at any given time or due to project or production needs, need an extra liquidity. For this it is vital to know if our company is submerged in a crisis and what we need to be able to get out of the way gracefully.
That a company has sales or even that it achieves an increase in them does not necessarily mean that it is a financially endowed company in good health. This is because a greater number of sales necessarily requires a greater working capital, which can translate into more operations, inventories, fixed costs or even more accounts receivable. And without liquidity or balance, it will be difficult to cope with this new situation.
- 1 When is financing necessary for companies in crisis?
- 2 How to know if a company is in crisis?
- 2.1 Do we have difficulty paying providers?
- 2.2 Do we owe money to entities?
- 2.3 Do we have cash flow problems? How is our real estate? Do we have any type of valuable machinery pledged as collateral in a commercial or bank loan?
- 2.4 Do we have less profit than before with the same expenses?
- 2.5 Do we observe that managers or workers leave the company?
- 2.6 Is new competition entering the sector? Does the competition disappear from the map?
- 2.7 Other questions to ask ourselves
At what point is financing necessary for companies in crisis?
Some of the statistics say that 25% of businesses with financial problems do not have the capacity to recover and operate again; others speak of a much higher percentage that ranges between 43% and 46%.
Some entrepreneurs are unaware that their business is in trouble because they simply ignore the signs, trusting that it will not grow.
Financial consultants pay close attention to information, the best power tool in business management. They recommend staying very attentive to what the company tells us in relation to suppliers, customers and a number of other situations. Attending to all this and simply observing can be a great opportunity also for entrepreneurs who base their business on the purchase of companies in crisis or on the sale of companies in crisis .
For all this, it is necessary to spend time to know the financial status of the company and the rest of the valuable information that allows us to evaluate the situation of our organization. Thus, if necessary, the decision can be made to resort to financing for companies in crisis through a private equity loan to solve a specific situation.
How to know if a company is in crisis?
In order to know if a company is in crisis, you have to pay attention to some symptoms:
Do we have difficulty paying providers?
If there are specific difficulties in paying suppliers or other payment obligations such as taxes or social security, this is a first sign that the company may be in a difficult situation.
Do we owe money to entities?
If we are trying to reunify the debts , adapting the loan operations by lowering the monthly payment or even looking for new financing to be able to update our commitments and level the cash flow, the company does not have a good financial condition.
Do we have cash flow problems? How is our real estate? Do we have any type of valuable machinery pledged as collateral in a commercial or bank loan?
If the answer to these three questions is yes, the company's crisis is clear.
Do we have less profit than before with the same expenses?
If we appreciate that the market has contracted, that sales do not grow, that the price cannot be increased, that the profit margin is lower than the previous year and that the marginal profits do not have the capacity to cover fixed expenses and costs , we find ourselves in a situation in which the company operates well below the breakeven point.
Do we observe that managers or workers leave the company?
Coping with the loss of customers can be due to several factors, but the loss of staff must also be paid attention, since it is an unequivocal sign that something is not going well. In this case it is necessary to listen to what they have to say to us.
New competition entering the sector? Does the competition disappear from the map?
In both cases there is a problem. In the first because it is necessary to know who we are dealing with and in the second because, although at first it may make us happy, in reality we have to think if the business model is no longer profitable or if we have become obsolete to avoid being the next company to fall.
If of all the questions asked we have answered affirmatively to any of them, it is necessary to turn on all the alarms and take action to prevent the situation we are experiencing from worsening. You have to analyze and study all the situations and discover why this situation has arisen.
To solve a problem the first thing you need is to know it. Paying attention to it in the beginning is more valuable than if it is done when the crisis is very advanced and you can no longer even resort to loans to save your financial situation.
Other questions to ask ourselves
- What is our financial situation today?
- What measures do we need to avoid a crisis?
- What is our profit margin?
- Can we meet the financial commitments in the coming months?
Many entrepreneurs do not know the answer to each of these questions, and knowing them too late may mean that decline cannot be avoided.
It is necessary to make sure that the financial information we handle is completely true, timely, useful and that it helps us make the best decisions at all times. We can use monthly financial statements, which must be very accurate and of high quality. On a weekly basis we can also demand information with key success factors, indicators or metrics and results.
Although if what we must address is the non-payment of taxes or suppliers , that is, if after analyzing the situation the problem is just a lack of liquidity due to a mismatch in the balance, we can resort to private equity loans. In this way we can have the money available faster than in a bank, without such restrictive requirements and without linking that loan to acquiring a series of products that we do not need at this time.
If we need loans for companies in crisis, private equity entities are a simple and great resource to solve a specific problem in our business situation. Fasty Project Loans can not only provide us with the financing we need, but also offer us a totally personalized advisory and consulting service for companies, with the opinion of experts in the sector and more than 15 years of professional experience.