How AVANA Capital Helps Borrowers Navigate Uncertainty

  • March 5, 2024

Conflicting economic signals are making it difficult for businesses to plan for the year ahead. AVANA Capital can help.

Like an approaching storm that has yet to make landfall, the long-forecasted recession has left many business owners hesitant about their near-term plans.

Many are still determining if they should brace for impact or push forward. This uncertainty is understandable, given the contradicting economic signals seen today. For example, credit spreads – the difference between corporate bond yields and the yield on a treasury bond of equivalent maturity – remain relatively tight, indicating that we have not yet entered recession territory. In contrast, the rapid-fire rate hikes of 2022 and 2023 could dramatically slow economic growth in the coming months. As the new year approaches, what will business leaders do?

A recent survey suggests businesses plan to take a more proactive approach in 2024. A report from Bank of America shows that just over three-quarters of business owners plan to obtain funding for their enterprise.

However, in an uncertain environment, businesses need a lender representing more than just capital. They need a partner who takes the time to learn their financing needs.


Here, we look at the three ways AVANA Capital fills that role.

AVANA Capital Has a Long-Term Perspective

Our long-term perspective allows us to build partnerships that flourish. By lending to quality businesses that share our long-term perspective, we can build the capital needed to issue more loans. As a result, one successful partnership turns into two. Two partnerships can become four. Simply put, our long-term thinking creates long-term success for borrowers and the communities in which they operate. This approach is what makes us a social impact-focused investor.

A long-term perspective is essential for another reason: without it, loan issuances become an asset class disconnected from the community. Consider collateralized loan obligations (CLOs), which group loans of the weakest borrowers only to repackage them as bonds. Asset managers created CLOs worth over half a trillion in 2021. Today, the demand for the bonds tied to these loans is expected to drop considerably. As a result, defaults are expected to rise.

In contrast, borrowers who partner with AVANA Capital engage in a shared vision of the long term success of the business venture. The relationship is more than the transaction. We work with the borrower to ensure their long-term success. In doing so, we identify ways the company can expand, explore refinancing opportunities, and assess profitability to help reduce default risks. Our goal at AVANA is to enable success and to work collaboratively so that risk is measured and managed.

The bottom line is that the borrower needs to know they are working with a lender that sees their businesses as more than a sales goal or financial instrument. The business has to thrive in the long run.



AVANA Capital Serves as a Risk Manager

The best lenders have more to offer than capital. They offer risk management. At AVANA Capital, we can help business owners manage risk because we have the perspective to see challenges before they emerge.

We take the time to understand the dynamics of the borrower’s business. We consider the state of the company’s market, examine how demographic changes will play into the business’s long-term plans, and determine how well the business can leverage differentiators to defend against competitors. Part of our lending philosophy is that the borrower’s success is our success.

Nothing exemplifies this idea more than our partnership with a developer who faced the risk of not moving forward with a project. In this case, the lending institution abandoned the developer without warning. This outcome was especially difficult for the developers because they were already in construction. AVANA Capital stepped in.

We mobilized a team to perform due diligence while construction continued. This approach allowed the developer to seek funding while keeping the project on schedule. AVANA Capital ultimately provided the funding, which allowed the developer to meet the target opening date while creating over 100 new jobs. This outcome was possible because AVANA Capital offers structured solutions that enable the borrower to interact directly with our key decision-makers.


AVANA Capital Considers the Hard and Soft Factors

Borrowers build a more substantial, more durable business when they partner with a lender who considers hard and soft factors. That’s why AVANA Capital engages in holistic underwriting, which uses more than just numbers to measure the value of our relationships with borrowers.

While cash flow, EBITDA, and ROI all matter, we know that soft factors influence success as much as financials. We carefully consider the business plan, the business leader’s industry experience, the market conditions, and the degree to which the borrower is personally invested in the enterprise’s success.

These soft factors matter because they represent areas of risk that are often ignored. Unfortunately, not enough lenders make these factors an area of focus. Consider research from Boston Consulting Group (BCG) showing that many firms’ non-financial risk management capabilities are below where they need to be. Their analysis of 45 banking institutions worldwide showed a level of non-financial risk management that averaged about 2.5, “leaving plenty of room to improve.”

At AVANA Capital, we take a more proactive stance towards these factors by aligning ourselves with our investors and capital partners to enable the borrowers to sustain themselves in the worst case and thrive in the best case. We adopt an ownership mindset.


Running a successful business is more complicated than it has ever been. Therefore, business owners must partner with a capital provider that represents more than just financing. They need a lender to help them see the road ahead, mitigate risks, and understand the hard and soft factors influencing success.