When businesses face financial stress—overdues, defaults, or classification as NPA (Non-Performing Asset)—traditional banking channels often close their doors. Credit ratings get downgraded, CIBIL scores deteriorate, and access to mainstream finance becomes increasingly blocked.
This is where we step in: offering customized funding solutions to revive your business and unlock the much-needed liquidity.
We arrange for a complete debt takeover with an alternative lender, offering additional working capital and a structured repayment model, thereby resolving cash flow blockages and providing operational freedom.
Wherever feasible, we also propose a restructuring arrangement with the existing lender, delaying immediate cash outflows and regularizing the account.
Sometimes, the only need is bridging support to clear overdues—preventing NPA classification and avoiding legal actions under SARFAESI Act.
Businesses like diagnostic centers heavily rely on core machines (e.g., X-ray or MRI machines) for revenue. If a critical asset becomes non-functional, operations are paralyzed. This disrupts cash flow and leads to a mismatch in meeting repayment schedules, resulting in SMA slippage, and eventually, the account getting tagged as a Non-Performing Asset (NPA).
In partnership firms or closely held companies, a dispute or exit of a key stakeholder can disrupt continuity. This disruption often leads to operational inefficiencies, missed orders, and payment delays—thereby pushing the account into SMA-1 or SMA-2 categories before slipping into NPA status if unresolved. This situation may also reflect as a CIBIL downgrade of guarantors.
Often in MSMEs, personal finances and business working capital are deeply interlinked. A promoter diverting funds due to a medical emergency or family conflict leads to cash crunch, resulting in stress in day-to-day operations and delays in EMI servicing. Over time, this becomes a classic case of a financially stressed account that qualifies for distress funding support but may already be showing signs of being a Stressed Asset on the lender’s books.
Businesses diversifying into Joint Ventures or new verticals without proper evaluation may suffer losses. These ventures drain cash and management bandwidth, hurting the primary business. With no buffer to serve fixed obligations like term loan repayments, the account can quickly slip from standard to SMA, and finally into NPL (Non-Performing Loan) territory.
If a major customer order is cancelled after significant procurement and manpower mobilization, the sunk cost becomes unrecoverable. The resulting liquidity shock affects the entity’s ability to run operations and service loan commitments, marking the account as stressed. Over time, without liquidity injection, the business becomes a candidate for turnaround or special situation funding.
Banks sometimes sanction only term loans for asset purchase or construction without providing working capital. If the promoter lacks surplus liquidity, daily obligations remain unmet, leading to early-stage distress. The account deteriorates from SMA to NPA, not due to lack of viability but due to poor structuring. This also impacts the entity’s ability to maintain banking relationships or raise further debt.
At times, banks classify accounts as NPA based on non-compliance with financial covenants such as DSCR, promoter contribution ratios, or capital adequacy norms, even if payments are not defaulted. Audits or internal compliance checks may trigger such classification, causing reputational damage, CIBIL score erosion, and hindering the entity’s ability to raise funds despite being operationally viable.
When an entity avails multiple credit facilities from a single bank, the default or irregularity in one facility (e.g., Cash Credit limit overdrawn or non-maintenance of balance) can cause a technical NPA flag. This triggers a domino effect, resulting in other regular accounts being classified as stressed or even NPA. Once this happens, the entire account becomes restricted, blocking further disbursements or restructuring—thus requiring special situation resolution strategies.
When an entity avails multiple credit facilities from a single bank, the default or irregularity in one facility (e.g., Cash Credit limit overdrawn or non-maintenance of balance) can cause a technical NPA flag. This triggers a domino effect, resulting in other regular accounts being classified as stressed or even NPA. Once this happens, the entire account becomes restricted, blocking further disbursements or restructuring—thus requiring special situation resolution strategies.
A number of companies expanded aggressively into growth stages just before the COVID-19 pandemic, investing heavily in CAPEX driven by projected demand. The unexpected demand crash post-COVID left these companies with high fixed costs and loan repayment schedules but limited operational income. Such cases became textbook examples of financially impaired entities, requiring restructuring under RBI’s stress resolution frameworks or qualifying for pre-NCLT revival funding.
Struggling with a distressed account? Our team delivers precision funding solutions from bridge loans to OTS to safeguard your operations and preserve value. Let’s connect and secure your asset turnaround.
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If you are looking for funding solutions or are interested in acquiring distressed properties at attractive valuations, reach out to us!
