Rescue Finance: Where to Find It & How to Pitch

Discover practical rescue finance options—from turnaround loans to debtor-in-possession funding—and how to secure the capital your company needs.

When cashflow runs dry but the business itself still has a future, rescue finance can be the lifeline that keeps you trading, protects jobs and preserves value. Drawing on decades of insolvency experience, I’ll walk you through the main rescue-finance routes available in the UK, explain what lenders look for, and share tips on crafting a winning pitch.

Why Seek Rescue Finance?

Bridge cashflow gaps while you implement a turnaround plan.
Fund urgent working-capital needs, like paying suppliers or meeting payroll.
Avoid formal insolvency – rescue finance bought early can prevent CVAs or CVLs.
Signal confidence to stakeholders when you have the funds to execute your recovery.

Main Rescue Finance Options

1. Debtor-in-Possession (DIP) Funding

What it is: A short-term loan secured on future cashflows and invoices.
Who provides it: Specialist lenders (turnaround funds, mezzanine funds).
Key features:
- Floating charge security, often second-ranking to existing bank debentures
- Interest rates higher than bank debt but lower than unsecured
- Facility tailored to your 13-week cashflow needs

2. Turnaround Loans from Banks

What it is: Unsecured or secured loan from your existing relationship bank.
Who provides it: High-street banks with dedicated turnaround teams.
Key features:
- May include covenant waivers or covenant relaxation
- Often requires clear a turnaround plan with KPIs
- Can be structured as an overdraft extension or term facility

3. Asset-Based Lending (ABL)

What it is: Lending secured against specific assets, such as stock, debtors, plant.
Who provides it: ABL specialists or banks offering invoice discounting/stock finance.
Key features:
- Advance rates typically 70% to 85% of debtors, 40% to 60% of stock value
- Monitoring of debtor ledger and stock levels
- Quick to set up if systems are robust

4. Vendor & Supplier Finance

What it is: Extended payment terms or staggered payments negotiated with suppliers.
Who provides it: Key suppliers or structured via supply-chain finance platforms.
Key features:
- Improves working-capital position without new debt
- Requires strong supplier relationships
- Can be combined with partial early-pay discounts

5. Equity Injection or Shareholder Loan

What it is: Fresh equity from shareholders or related parties, or a director’s loan.
Who provides it: Existing owners, private equity, or family offices.
Key features:
- Can be convertible into equity or structured as high-rate loan
- Shows market confidence in the turnaround
- May dilute existing shareholders (if equity)

What Lenders Will Expect

A Robust Turnaround Plan

- Detailed 13-week cashflow forecast
- Clear cost-cutting and revenue-growth initiative
Transparent Financials
- - Up-to-date management accounts
  - Clean balance sheet and reconciled debtor/stock schedules
Strong Governance & Controls
- Regular board reviews and documented decisions
- Professional record-keeping to guard against future challenges
Security & Covenants
- Clear security package (charges, personal guarantees)
- Reasonable covenants tied to KPIs you can meet

Practical Tips on Pitching Rescue Finance

Start Conversations Early: Don’t wait until the bank has frozen your overdraft.
Be Honest About Risks: Lenders value transparency on customer concentration and order pipelines.
Show ‘Quick Wins’: Demonstrate cost savings or contract wins already in hand.
Use Professional Presentations: A succinct slide deck with three-year P&L, cashflow charts and key ratios goes a long way.
Engage an IP or Turnaround Consultant: Their endorsement and accompanying report can bolster your credibility.

Takeaway Checklist

✅ Prepare a rolling 13-week cashflow forecast and highlight gaps
✅ Draft a one-page turnaround plan with clear milestones
✅ Reconcile and age your debtors and stock schedules
✅ Identify assets suitable for ABL (stock, debtors, plant)
✅ Approach lenders with proof of concept (e.g. signed customer contracts)
✅ Negotiate supplier payment terms before seeking new debt
✅ Document board minutes approving the finance strategy
✅ Engage a licensed insolvency practitioner early to review proposals