Turning on a dime – Lending to a business undergoing a pivot

Description

Abstract: If an existing borrower decides to change course, how should the lender evaluate a subsequent loan application? This article lists some questions that will help determine whether a borrower’s new business model is viable — such as why the business needs to pivot, how the loan will help the company pivot and whether the borrower has experience pivoting. The article points out that it’s important for the lender to understand the degree of risk associated with the move and the likelihood that the borrower will be able to reinvent the business.