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Alternative Financing

Businesses usually structure the purchase of assets - whether these are immovable property, machinery or equipment - and operating capital through traditional banking products. The terms of the traditional loan facility/structured finance deal are such that the business pays back both capital and interest over the specified term. The result of this method is that by the time that the business has repaid all the capital, it will need to start from the beginning again to refinance a replacement asset. Is there an alternative repayment method? The answer is YES. The need: The need is to structure a bank loan in an alternative manner that will offer business clients who are entrepreneurial by nature and are willing to take calculated risks, an opportunity to achieve other benefits for themselves. The solution The bank consents to the business structuring its repayments so that it pays interest only over the specific term of the loan/structured finance deal. The business couples this with an investment to build up capital that will have a minimum return equal to the outstanding capital balance at the end of the term. Through the Momentum Alternative Finance Repayment scheme a business can create an alternative asset for itself that could generate additional wealth and other benefits while guaranteeing it a minimum payout from a variety of funds. The benefits Some of the benefits of the Alternative Repayment Scheme include: Increased tax deductions Tax-effective capital extraction Gearing Enhancing security Increasing and replacing traditional suretyships Diversifying to an alternative investment type Increasing the value of the business through the creation of an on-balance sheet asset
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