Some Benefits of Mezzanine Financing

 

Mezzanine Financing
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A water sports enthusiast, Jim “James” Knell works professionally in the Santa Barbara real estate industry as as an investor and property manager. A graduate of the University of California Santa Barbara, Jim Knell currently manages SIMA Corporation as its founder and chairman.

At SIMA Corporation, Mr. Knell’s responsibilities range from asset and portfolio management to underwriting and structuring mezzanine financing. Mezzanine financing is an alternative form of financing often employed by small or mid-sized companies to fund growth. Specialty lenders typically provide mezzanine financing, which involves both debt and equity funding.

Essentially, lenders issue debt to a borrower and also purchase an issuance of the company’s stock, which raises additional funds for the borrower. Lenders that engage in mezzanine financing are often most interested in this equity stake they acquire.

Although mezzanine financing carries high interest rates, it does offer an array of benefits. In addition to a long-term outlook, mezzanine financing has no collateral requirements and provides flexibility in loan terms that include amortization and rates. Moreover, business owners are able to keep full control of business operations as long as their company is profitable and meets debt payments. Finally, mezzanine financing is recorded as equity on balance sheets, allowing for additional financing options.

The SIMA Acquisition Philosophy

SIMA Management Corporation
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James “Jim” Knell is an experienced Santa Barbara, CA, real estate professional who has served as chairman of SIMA Corporation and all SIMA companies since 1984. Under the guidance of Jim Knell, the SIMA family of businesses acquires and manages properties not only in Santa Barbara, but throughout the United States.

When it comes to property acquisitions, the SIMA philosophy is to complete all transactions in the most effective and timely manner possible. Functioning as a one-stop real estate firm, SIMA employs agents who are skilled at developing a variety of acquisition strategies. That said, the SIMA team prefers to only pursue acquisitions that fit the company’s synergistic strategy. All acquisition tactics begin with identification and a thorough vetting process, followed by discussions about value optimization, which may be achieved through development, refinancing, or a variety of property management processes.

Following a successful acquisition, the organization draws on a depth of resources and a knowledgeable workforce to fulfill long-term growth and up-front profitability objectives.

Different Methods to Restructure Debt

SIMA Management Corporation
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Educator-turned-real estate investor Jim Knell established SIMA Corporation in Santa Barbara, California, in 1984. As chairman, he is responsible for identifying and rehabilitating distressed properties in the Santa Barbara area and in the Pacific Northwest and southeastern United States. Jim Knell also handles debt restructuring for investment groups.

Debt restructuring is one aspect of debt management. Specifically, it refers to the process of adjusting loan terms to benefit debtors in terms of their loan repayment. There are several methods of debt restructuring. One is through a debt consolidation loan. This method allows indebted individuals to consolidate multiple loans into one debt, with a fixed interest rate and fixed payment terms. Credit card counseling can also help debtors come up with comprehensive debt restructuring plans.

Home equity loans can also be used to pay off debt. This type of loan is long term, so it is often a less expensive alternative to other strategies of restructuring debt. As a last resort, debtors can file for bankruptcy. In certain cases, such as a chapter 13 bankruptcy, individuals are granted a 5-year debt repayment plan which may enable them to get back on a sound financial footing.

What Is Recapitalization?

Recapitalization
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A graduate of the University of California Santa Barbara, Jim Knell is a real estate executive with decades of experience in the field. As the chairman of the SIMA umbrella of companies, Jim Knell has orchestrated over 30 recapitalizations.

Recapitalization is generally defined as a tool used by corporations to restructure assets, particularly the mix of debt and equity. The goal of recapitalization is usually to improve a firm’s overall financial stability, and the process often involves negotiating and exchanging financing mechanisms.

A company may recapitalize for a number of reasons, such as to improve liquidity, allow an exit for venture capitalists, or to improve the tax position of a firm. In addition, various recapitalization strategies can be implemented. One example of a strategy is swapping debt for equity by issuing stock to buy back corporate shares, thereby lowering the tax liability of a firm, since debt interest payments are tax deductible. Another strategy is to shift the overall balance of debt and equity by issuing stock to fund dividends.

How Chapter 11 Bankruptcy Helps Business Owners

Chapter 11 Bankruptcy
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A business owner with recapitalization expertise, Jim Knell serves as the chairman of SIMA Corporation. Jim Knell has a background in financial restructuring, which he leverages to help business owners and investors.

While bankruptcy proves an ideal solution for some business owners who want to forgo part or all of their debt, it may not appeal to all. Depending on the type of bankruptcy filed, a business owner may be forced to cease operations and turn over his or her company to a creditor.

However, a Chapter 11 bankruptcy can help owners keep their businesses. Chapter 11 allows debtors who have filed their businesses as partnerships, corporations, or limited liability companies to restructure their finances through a plan of reorganization. Approved by a bankruptcy court, the plan details amended loan payment terms to help business owners continue operations without accruing more debt. As such, they may be able to regain profitability. Further, the plan gives debtors the option to downsize through the selling of assets. Funds gained are then used to pay outstanding debts.