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Supporting SME restructuring with Olvera Capital
As the fallout from the COVID-19 pandemic continues, many SMEs across the country are likely to consider formal restructuring or voluntary administration in the period ahead.
While insolvency practitioners do not expect a rush of corporate failures due to government assistance coming to an end, it’s still the case that thousands of SMEs face the prospect of difficult times ahead, especially in hard hit sectors like tourism, hospitality and retail.
Olvera Advisors knows that for SMEs, when it comes to restructuring or voluntary administration, a big issue is that traditional sources of capital can be hard to come by.
Damien Hodgkinson, a partner with the Sydney-based transformation and restructuring firm, says that’s why it has launched Olvera Capital, a new venture that offers fast, affordable and stress-free financing to SMEs trying to navigate the insolvency process.
A lifeline for SMEs
"When it comes to securing working capital, the big end of town is well covered but for those businesses trying to secure short-term financing on liabilities of less than $2 million it can be a very different picture," Hodgkinson says.
“When a big company goes into administration there are many distressed lenders prepared to come in and help with the refinance, but when you start to talk about the small and medium-sized companies, which is around 90 per cent of the market, there’s only around half a dozen, and they’re mostly private lenders.
“That’s what Olvera Capital is seeking to address. Olvera Capital is one of the first products targeted at that market on a national basis, seeking to do provide a finance solution, a lifeline, for SMEs going through restructuring that advisors can put to their clients.”
According to Hodgkinson, while the federal government’s recent insolvency reforms can assist SMEs with liabilities of less than $1 million to restructure and survive the economic impact of COVID-19, many struggling SMEs aren’t covered by the reforms.
He says Olvera Capital is ideally suited to assist such firms, especially those with liabilities between $2 million and $5 million, access the capital they need to keep operating.
“A large portion of the businesses that would benefit sit in that $2 million to $5 million range, and that’s where this product focuses,” Hodgkinson says.
Getting SMEs back on their feet
Whether it’s to fund a deed of company arrangement or fund working capital post deed of company arrangement, Hodgkinson says Olvera Capital can provide companies going through formal restructuring or voluntary administration with finance of up to $1.5 million.
For some companies, he says these loans can be designed to cover funding for a deed proposal, while in other cases companies require short-term cashflow support, or the use of Olvera Capital's own funds as a financial guarantee.
In what is a usually a very time-sensitive context, he says a fast and easy application process is another benefit of Olvera Capital.
“If advisors come to us before they make the appointment we can usually do all the credit assessments in advance of them putting it into administration, so they’re walking into the administrators’ office with effectively a funded proposal,” he says.
“If they don’t and they approach us after, we can usually give a view to the administrator within about seven days of their appointment, before the first creditors’ meeting.”
Whatever the situation, Hodgkinson says Olvera Capital works hand-in-hand with business owners to understand their situation in order to create a loan plan that gives them the best chance “to both service their debt and get back on their feet”.
“We recognise the companies that make it through restructuring are often in a strong business position. Our goal with Olvera Capital is to ensure that as many companies as possible get the chance to make good on their potential."
For more information, visit https://olveracapital.com/
