Alternative Funding

For a corporate treasurer, “alternative funding” refers to sources of capital outside traditional syndicated bank loans and public bond markets. It is not just for startups but a strategic toolkit for established companies to diversify funding sources, access flexible capital, and finance specific strategic initiatives. The global private credit market, a major component, is now worth over $2.1 trillion, showing its scale and relevance for corporates.

Key Alternative Funding Options for Corporates

Strategic Considerations for Implementation

When evaluating alternative funding, treasurers should assess:

• Strategic Fit: Is it for a specific project (project finance), ongoing working capital, or a strategic transformation?

• Cost vs. Flexibility: Alternative lenders often charge more but offer tailored terms, faster execution, and more flexible covenants than traditional banks.

• Relationship & Complexity: These are bilateral, relationship-driven solutions but may involve more complex legal structuring and reporting.

• Balance Sheet Impact: Classifying instruments correctly (debt vs. equity, on vs. off-balance sheet) is critical for reporting and covenant compliance.

In summary, alternative funding is a mature component of the capital markets. A modern treasurer’s role includes managing a diversified funding mix, where these instruments provide strategic options to enhance liquidity, finance growth, and optimize the balance sheet.