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What financial instrument is most
suitable?
Each financial instrument is designed for a specific purpose that has a defined target group and, as a result, operates under specific criteria. Whether the borrower or investor is sensitive to interest rates, advance rates, amortization periods or the term of a loan, the primary criterion that determines the cost of capital is the source’s perception of risk.
Why can one bank offer lower interest rates to certain clients? Different institutions have different perceptions of risk in each industry and in each deal. Although ratio calculations, cash flow, debt service and profitability to a large degree influence the cost of capital, other elements also play a significant part.
As part of any of our mandates, we assist our clients to promote the strengths of their company and manage or bolster any areas of concern. Our ability to leverage our relationships, correctly analyze and package each deal and match them with lending ensures that our clients receive the most favorable lending terms.
Analyzing our client’s balance sheet helps determine which borrowing instrument is most appropriate. However, this does not mean that lenders will be equally receptive to a file. Understanding which lender is active in a specific market and the reasons behind it is critical when positioning a file. Although the market is comprised of a variety of lenders and credit instruments, we structure all of our files to target the right lender. Our objective is to save time and money, but more importantly, to ensure that today’s financing solution can act as the basis for our clients' future needs.
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