Alternative lenders should consider transactions in new territories. As the 2008 financial crisis unfolded, stories of failing banks and businesses dominated the headlines. However, there were companies in distress that survived, in spite of their precarious situations, as a consequence of lowered interest rates. Just as these lower rates helped banks stay afloat, they also helped to keep some less-than-healthy companies alive. Call it the Federal Reserve’s secondhand bailouts; this artificial business environment enabled those companies to stay in business until today.
The outlook for 2015 is no different, with many businesses still surviving because of low interest rates, resulting in a static market for financial restructuring. According to a recent Deloitte LLP report, three-quarters of United Kingdom banking institutions, asset-based lenders and alternative lenders expect no improvement in their restructuring activities for the rest of this year. It’s a sentiment echoed throughout the rest of Europe and the U.S. But this scenario may change, creating opportunities especially for alternative lenders.