New York Private Finance structures loan facilities with tenors of three to six years. Why do we do this? The primary reason is to ensure that our clients have plenty of time to execute on a strategic vision without feeling the burden of near-term principal repayments. This is especially important in recent years, as bank regulation has steered the major banks toward tenors of a year or so, with the assurance that such a loan can roll over at the end of the one-year period. Unfortunately, there is ultimately no certainty of such a roll-over, so we structure our loans to ensure that repayment pressure need not affect a client’s planning. Medium-term loans from NYPF are designed to give clients time to execute strategic plans without the pressure of near-term principal repayments.
Another reason for the medium-term tenor is that we want our clients to be able to carry on through a business cycle. If a recessionary period sets in, we want our borrowers to be able to focus on the basics of their business not to be worrying about loan repayment. Most recessions last on average about ten months, so a five or six year tenor provides plenty of time to grow through a periodic downturn.
It is not our goal to lock our clients in, however. While medium-term loans from NYPF are designed to last for five or six years, there is no prepayment penalty. The goal is maximum flexibility with minimum risk. If a borrower wishes to keep his loan outstanding for the full term, we are thrilled. Conversely, if his business turns out such that he can repay us before the term is up, we are happy that matters have worked out so well and wish him godspeed.
Please contact us to learn how we can help.
