90 Day V. 30 Day Extensions

The Scenario:

  • A bank deal
  • The bank can’t assist anymore (company is either in trouble or growing too fast)
  • The bank asks the company out and gives it 30 days to exit
  • At the end of 30 days, the company isn’t even close to exiting and asks for an extension. What do you do?

The Answer:

  • Give them 30 days; not 90!!! When there’s no real push to get out, companies will drag out the process telling their bankers stories like:
    • I haven’t found another lender
      (Meaning: I haven’t found one as cheap as what I’m paying now)
    • I need more time
      (Meaning: other banks are turning me down)
    • Won’t you change your mind? Things are going to get better.
      (Meaning: I haven’t started looking yet/I’m not following up with the lender you referred me to/ I don’t think you really mean it).
  • Before you dole out a 90 day extension, call the lender to whom you referred the company and see how quickly they can take you out. With the right lender, it doesn’t have to take an extra 90 days to exit a company. At Celtic Capital, many of our deals are completed in 30 days or less so if you have to give an extension, start with 30 days.

The Bottom Line:

  • When banks give companies too much rope (90 days V. 30 days), they better be prepared for extension request after extension request after extension request. And if the company further deteriorates during that time, good luck getting out in full, or at all.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.