Business rescue finance: funding a turnaround or restart

If your company cannot pay its debts, the first conversation is with a Licensed Insolvency Practitioner, not a lender. An IP will establish whether the company is insolvent, which procedure fits, and what your duties as a director now are, including the personal risks covered on our wrongful trading page. Borrowing to prop up a company that has no realistic way back does not save it; it usually makes the position worse and can make you personally liable. Finance has a real role in rescue and restart, but it comes after that advice, through an FCA-authorised broker, as part of a plan. That two-step order is how the process is meant to work, and it is how we arrange introductions.

A company that is fundamentally sound but squeezed can often avoid formal insolvency with the right facility. The common moves are invoice finance to release cash tied up in unpaid invoices, asset-based lending against stock or machinery, refinancing to replace expensive short-term debt, and specific funding to clear a VAT or tax bill before it turns into a winding-up petition. The test an adviser applies is always the same: is the underlying business viable, and does the borrowing fix the actual problem rather than delay it? If the answer is no, the honest route is an insolvency process, not more debt.

When a company has gone through liquidation or administration and the director starts again legitimately, the new company has no trading history, and that shapes what funding is available. Invoice finance stands out here because the lender underwrites the creditworthiness of your customers rather than the age of your company, which is why a new company invoicing established businesses can often be funded from early on. The full picture, including the legal rules a restart must respect, is in phoenix company finance, and the regulated purchase route is covered on our pre-pack administration page.

As a rough map: invoice finance releases working capital before insolvency and can fund a new company trading afterwards. Asset-based lending suits asset-rich companies restructuring, and recapitalising a restart. Asset finance (hire purchase or leasing) puts equipment and vehicles into an ongoing business or a restart without a large cash outlay. Refinancing replaces high-cost debt as part of a recovery plan. VAT and tax-bill funding clears an HMRC liability for an otherwise viable firm. Each product has its own guide in this series, and none of them is a substitute for insolvency advice where the company is already insolvent.

We do not lend, and we do not arrange finance ourselves. Where finance is the right next step after insolvency advice, the introduction goes to an FCA-authorised broker. For orientation, our sister sites cover the market: invoice finance for a business with no trading history and business loans with no trading history. One important guard: those routes are for a company whose old affairs have been fully dealt with. If your current company is still in, or heading into, an insolvency process, speak to a Licensed Insolvency Practitioner first.

The funding side: phoenix company finance rules, invoice finance during a CVA or administration and HMRC arrears funding options, plus illustrative case studies showing how the pieces fit together. The legal spine sits on our core pages: phoenix companies and the name rules, pre-pack administration and wrongful trading.

LTD Turnaround is an information and introduction service. We do not provide legal, insolvency or financial advice. Insolvency matters are referred to a Licensed Insolvency Practitioner. Finance is referred separately, and only after insolvency advice, to an FCA-authorised broker. We may receive a referral fee; this does not affect what you pay or the service you receive.

Reusing a company name, buying assets from a company you were a director of, or taking on new borrowing while the company is insolvent can carry criminal and personal liability risk. Before acting, take advice from a Licensed Insolvency Practitioner and, where a company name or disqualification question is involved, a solicitor.