Standard finance products work well for standard needs: a defined amount, a fixed repayment schedule and familiar security. But some business requirements do not fit that mould. When timing, repayment source or risk is unusual, forcing the requirement into a standard product can create a mismatch that strains the business later. That is where a structured approach can help.
Signs your requirement may need structuring
- Capital will be deployed in stages over a long implementation period
- Cash flow will start only after a project milestone is reached
- Repayment depends on a specific contract, receivable or business event
- Several assets, entities or counterparties are involved
- Existing obligations need to be refinanced alongside fresh capital
- The transaction is linked to an acquisition or a restructuring
Common structural features — explained simply
- Milestone-linked disbursement
- Funds are released in tranches as defined project stages are completed, so capital is deployed only when it is needed.
- Moratorium
- An initial period during which principal repayment (and sometimes interest) is deferred, typically until the investment begins generating cash.
- Cash-flow-linked repayment
- Repayment amounts track the expected cash generation of the business or project instead of a flat instalment.
- Bullet repayment
- Principal is repaid in one amount at the end of the tenure, often aligned to a known future inflow.
- Escrow mechanism
- Specified receivables flow into a controlled account from which obligations are serviced first.
- Receivable assignment
- Rights to specific contract receivables are assigned as a source of repayment or security.
- Financial covenants
- Agreed financial thresholds — such as leverage or coverage levels — and reporting that help both sides monitor the transaction.
These are illustrations of how structures can be designed. Availability of any feature depends on the financier’s mandate, regulatory permission and the specific transaction.
How a structured transaction is evaluated
- Understand the requirement – what is the precise commercial purpose?
- Map the transaction – who are the parties, what are the assets, and how will money move?
- Identify the repayment source – what cash flow, asset or business event supports repayment?
- Evaluate risk – what happens if revenue, cost or timing assumptions change?
- Structure protection – what security, covenants, controls or milestones are appropriate?
- Align expectations – do all parties understand the commercial terms and responsibilities?
- Monitor performance – what information should be reviewed through the transaction period?
Refinancing versus fresh finance
Sometimes the real issue is not the need for new money but an existing structure that no longer fits — for example, short-term borrowings used for long-term assets. Rebalancing the capital structure can reduce pressure on cash flow. Any refinancing proposal should be evaluated on the total cost, the new repayment profile and whether it genuinely improves sustainability.
Have a requirement that does not fit a standard product? Read about our Structured Finance approach or send a brief transaction note through our enquiry form.
