Recently we shared our perspective on the importance of transaction type when selecting a financing provider. While we believe that is the most important factor to consider when selecting a provider, there is a close second.
With the commercial real-estate market in many parts of the country on the verge of imploding and interest rates at their highest rate in over 20 years, the markets are filled with uncertainty. Not surprisingly the commercial mortgage market is barely to be found. It’s understandable, as the natural response to economic uncertainty is that people hold on to their cash. Investments slow down and traditional borrowing becomes even more challenging.
Litigation finance is another sector that has been greatly affected by the interest rate rise. Covid court closures also compounded the industry’s woes by extending the length of time it took to resolve litigations. Interest rates and duration are two key components of how a fund marks it’s assets to market and both factors resulted in the assets of litigation funders being marked down. These factors partially explain why the cost of litigation finance has gone through the roof and is now more difficult to close.
In this type of market climate, who you work with matters. You want a finance partner that has been through uncertain market conditions before and understands the complexities of what you are facing. You want to work with someone that understands the challenges that may lie ahead and can create the right deal for you and your firm.
Don’t over-extend yourself, work with someone with experience in the industry and make sure your transaction type doesn’t result in you paying additional interest payments beyond what you initially agreed to. Said differently, floating interest rates found in many credit facilities. We’ve been in this business for more than 25 years. We’ve worked through all types of market conditions, a pandemic, the housing crisis and more.
Put our experience to work for you and your firm. Reach out, let’s discuss how you can accelerate your payments.