If you still are wondering how structured finance has anything to do with you, then here is a better example of how structured finance can work for you. To clear this out for you, I will ask you this question, whether you have ever wanted a form of financing to your business, or project that allows for wider range of possibilities than those provided by the available products of short-term financing provided by financial institutions like banks. This kind of financing is however limited to firms that have an acceptable level of credit risk or have undergone thorough scrutiny to determine whether they are credit worthy institutions.
So one may ask how different Structured finance is different from the ordinary types of financing packages available, and what is this access to financing on better terms we are talking about.
Well think about it this way, you have analyzed your market, and realized that there is a huge market potential, but you lack credit worthiness and thus no bank will advance any credit to you no matter how hard you try to beg of it. So most businesses are usually left with no option, and most give up not realizing there are other open options like structured finance, where you can have advanced credit not on your assets or other collateral agreed on.
Structured finance is tied to things like potential markets, and other non-common things like possibility of a certain market to have stable prices for commodities and services etc.
What a structured financial agreement generally contains are arrangements that will ensure that if the transaction proceeds normally, the financier is naturally reimbursed. This is because the loan is self-liquidated in that proceeds from the business profits will go to making the loan repay itself. Other arrangements will ensure that, if anything is to go wrong, the financier has a legal right to some assets as collateral that will be used to repay the debt advancement.What this means for your business is that you now have an option of accessing finance to grow and expand your business, without having to go through a bank, or credit letting institution, the advantage here being that you will achieve better costing, and longer maturity periods thus giving you a more favorable balance sheet.