Short answer: If your venture or growth debt matures within 12 months and no equity round is coming, treat the balance as a financing event now. Test repayment capacity, ask the current lender for an amendment, run a refinance in parallel, and prepare an equity, asset-sale, or restructuring fallback before time removes those choices.

The dangerous assumption is that maturity will somehow be solved by the round the company used to expect. Once that round is no longer in the plan, the debt has to be funded by cash, a lender, investors, a transaction, or a restructuring. “We are still exploring options” is not a source of repayment.

Founders and CFOs have two clocks to manage. The first is the contractual maturity date. The second is the earlier date when the company no longer has enough cash, covenant headroom, or negotiating leverage to execute a credible solution. The second date is the one that should drive the process.

Start with the two dates that actually matter

Write down the legal maturity date, then calculate the company’s practical decision deadline. Do not use the headline principal alone. Build the amount due from the executed documents:

  • principal outstanding and any undrawn commitment;
  • scheduled amortization before maturity;
  • cash interest, accrued interest and payment-in-kind interest;
  • final payments, exit fees, make-whole amounts and prepayment charges;
  • minimum-cash, liquidity, revenue and other financial covenants;
  • warrants, success fees or other equity-linked economics;
  • security, guarantees, account-control arrangements and lien-release requirements;
  • notice periods, cure rights, default interest and enforcement rights; and
  • change-of-control, asset-sale, additional-debt and cross-default provisions.

Have finance reconcile the schedule and have counsel confirm the legal reading. A board model that says “$4 million due” is not decision-grade if the payoff letter will be $4.5 million or the company cannot use its restricted cash.

Next, build a 13-week cash forecast if liquidity is tight and a monthly integrated forecast through at least six months after maturity. Show base, downside and management-action cases. Each case should include the full maturity payoff, not just scheduled interest and amortization. The result is the company’s maturity gap: cash required at maturity plus minimum operating cash, less cash available at that date.

Decide which situation you are actually in

The financing product comes second. First decide what is wrong with the current capital structure.

Situation What the evidence looks like Real objective
The business is financeable, but the maturity date is wrong Positive or near-term positive cash flow, credible retention and margins, manageable leverage, clean reporting and downside debt service Extend or refinance without creating a new liquidity problem
The business is viable, but it carries too much debt A solid core business cannot support the current balance, amortization or minimum-cash requirement Reduce debt through cash, equity, an asset sale, a negotiated conversion or a partial payoff
The business cannot fund its operating plan and the debt Persistent burn, declining revenue, weak sponsor support, limited collateral and no downside path to liquidity Preserve enterprise value and stakeholder options through a sale, workout or formal restructuring

Confusing these situations wastes time. A company that needs new cash cannot solve the problem with a maturity extension alone. A viable but overlevered company should not refinance the entire balance merely because a lender offers to do so. A company with no credible operating path should not spend its last unrestricted cash pursuing a standard refinance that cannot pass underwriting.

Your seven practical options

Option 1: Repay from cash and operate with a smaller plan

Cash repayment is the cleanest answer only if the company remains properly funded afterward. Test the payoff against payroll, taxes, critical vendors, committed product work, customer obligations and a board-approved minimum cash reserve. Include a downside case.

The operating response may involve stopping expansion, reducing headcount, collecting receivables faster, selling excess inventory or delaying discretionary investment. Those actions should create a business that can survive after the payoff. They should not simply move the crisis from the lender to employees and suppliers one month later.

Use this option when the debt balance is small relative to available cash and the post-payoff business is credible. Do not use it to protect a valuation narrative that no longer matches the operating plan.

Option 2: Amend and extend with the current lender

An extension changes the maturity date. A broader amendment may also change amortization, minimum cash, pricing, reporting, covenants or the amount of debt. The current lender already knows the company and controls the existing documents, so this can be the fastest executable route. It is still a new credit decision.

The Office of the Comptroller of the Currency describes problem-loan workouts as potentially including a renewal or extension, additional credit, a formal restructuring or foreclosure. That is the lender’s decision set, not just the borrower’s. Your request therefore needs to show why an agreed amendment produces a better risk-adjusted recovery than refusing it. See the OCC’s problem-loans overview.

Ask for a specific structure. For example: extend the maturity by 12 months, keep current cash interest, defer principal for three months, then amortize monthly, retain a defined minimum-cash covenant, and permit a payoff without penalty after month six. State the requested signing date and the source of repayment at the new maturity.

Expect the lender to consider a paydown, amendment fee, higher pricing, tighter reporting, new milestones, additional security, a cash sweep, board-observer rights or investor support. Model every term before agreeing. An extension that consumes all operating cash through amortization is not a solution.

Option 3: Refinance with a new lender

A new lender underwrites today’s company, not the valuation or equity syndicate that supported the original debt. The refinance case must stand on current revenue quality, gross margin, cash generation, burn, collateral, customer concentration, sponsor support and the amount that will remain after the old lender is repaid.

The likely lender lane depends on the evidence:

  • Another venture or growth lender may fit a company with strong recurring revenue, credible investors and a defined path to the next financing or cash-flow milestone.
  • Cash-flow term debt may fit a profitable or near-profitable business with visible debt-service coverage.
  • Receivables, inventory or asset-based facilities may fit when eligible collateral and operating controls support a borrowing base.
  • Equipment finance may release cash tied to identifiable assets, subject to lien and intercreditor constraints.
  • SBA-backed financing may be worth testing for an eligible US small business with reasonable repayment ability. The SBA states that 7(a) proceeds can refinance current business debt, but size, eligibility, credit and lender requirements apply. See the SBA 7(a) program.

Run the refinance against the complete payoff amount and transaction costs. Confirm lien releases, account-control changes, warrant treatment and any consent required for new debt. Do not announce a refinancing as complete until documents are signed, closing conditions are satisfied and funds can repay the existing lender.

Option 4: Raise equity without pretending it is the old round

“No new round” often means the planned institutional round is not available on the expected valuation and timeline. Equity may still be available in another form: an insider bridge, a flat or down round, a strategic investment, a preferred instrument, or a smaller financing paired with a lender amendment.

Build the proposal around the amount needed to fix the balance sheet and fund the revised operating plan. Show investors how much goes to the lender, how much remains in the company, what milestones that cash funds and what the capital structure looks like afterward. A financing that pays off debt but leaves three months of runway simply hands the next investor the same problem.

The board should compare dilution with the loss of value that a rushed maturity process can create. Existing preference rights, pay-to-play terms, fiduciary duties, related-party approvals and securities-law requirements need qualified legal advice.

Option 5: Make a partial paydown and restructure the residual balance

A company may not be able to refinance the full payoff but may be able to support a smaller balance. Sources for a paydown can include unrestricted cash above the operating minimum, insider equity, proceeds from non-core assets, a receivables collection program or a strategic investment. The remaining debt can then be extended, amortized, converted or refinanced.

This route needs one integrated sources-and-uses schedule. If the company expects $1.5 million from cash and $2 million from a new lender against a $4.5 million payoff, the remaining $1 million plus fees is still a financing requirement. Do not label it “management actions.” Name the source, owner, probability and date.

A lender may consider exchanging debt for equity, accepting a discounted payoff or changing principal economics when that produces a better recovery than the alternatives. Those negotiations can have tax, accounting, governance and cap-table consequences. The IRS states that canceled or forgiven debt is generally taxable unless an exception or exclusion applies, including specified bankruptcy and insolvency exclusions. Review the company’s facts with tax advisers before signing. See IRS Topic 431.

Option 6: Use a strategic transaction to fund the maturity

A company sale, asset sale, recapitalization or merger can repay debt when standalone financing cannot. This is viable only if the transaction can close before cash and covenant headroom run out. A buyer indication is not liquidity, and an unsigned letter of intent does not stop the maturity clock.

Review change-of-control, mandatory-prepayment, asset-sale, consent, lien-release and warrant provisions before approaching counterparties. Build a closing waterfall that includes debt, fees, taxes, employee obligations and minimum cash through closing. If sale proceeds may not cover the debt, the lender belongs in the process early because its consent and recovery decision can determine whether the transaction is executable.

Option 7: Prepare an out-of-court or formal restructuring

If no realistic transaction funds the payoff, engage restructuring counsel before the company misses payroll, taxes, reporting obligations or a required lender notice. Counsel can compare a consensual workout, a sale, an assignment for the benefit of creditors where available, Chapter 11 or an orderly wind-down. The right route depends on the entity, state, contracts, collateral, cash and stakeholder positions.

US Courts explains that Chapter 11 generally provides for reorganization, that a debtor usually remains in possession, and that filing generally triggers an automatic stay of collection and foreclosure activity, subject to exceptions and possible relief from the stay. It is a court process with reporting, fiduciary, cost and confirmation requirements, not a negotiating slogan. See Chapter 11 Bankruptcy Basics.

Preparing this contingency does not mean choosing it. It lets the board preserve records, understand cash and collateral, protect decision quality and avoid making a last-minute move without legal advice.

What to ask the current lender

Do not open with “What can you do for us?” Send a controlled request that a credit committee can evaluate. It should contain:

  • the exact facility, borrower, current balance, payoff estimate and maturity date;
  • the amendment requested, including tenor, amortization, pricing, covenants and prepayment;
  • the reason the expected round is no longer the base case, stated without sales language;
  • current cash, monthly burn, runway and covenant position;
  • historical performance against the plan used at original underwriting;
  • a base case, a downside case and actions management will take at named triggers;
  • the source of repayment at the proposed new maturity;
  • the amount and status of any investor, asset-sale or refinance support;
  • what the board and existing investors have approved; and
  • the required credit decision, documentation and funding dates.

Separate facts from assumptions. “Investor support” means a signed commitment, an approved reserve or a named process with evidence. It does not mean that existing investors like the company. “Path to profitability” means monthly cash flow with operating actions and owners. It does not mean an annual EBITDA target.

Read Alehar’s guide to preparing for a bank credit review for the underlying document, covenant and forecast controls. If covenant pressure is part of the maturity problem, use the executed definitions and testing dates, then review the guide to debt covenants.

Run two processes, not one

The primary path and the contingency path should run in parallel. If the preferred outcome is an extension, test a refinance and the required equity paydown at the same time. If the preferred outcome is a refinance, keep the current lender informed enough to preserve an extension route. If a strategic sale is possible, maintain the operating and restructuring plan that protects the company if the sale slips.

This is not about creating artificial competition. It is about avoiding a single point of failure. Each process should have a named owner, an information list, weekly milestones, a decision deadline and a board-approved walk-away point.

A 12-month maturity timetable

Time to maturity Required work Decision evidence
12 to 9 months Read all debt documents, obtain a payoff build, reconcile the debt schedule, build base and downside liquidity, test debt capacity, map liens and align the board Defined maturity gap, option map, minimum cash and approved process
9 to 6 months Make the specific current-lender request, launch refinance outreach, test investor and strategic support, prepare diligence and start any operating actions that improve cash before closing Written lender feedback, credible market interest and quantified fallback funding
6 to 3 months Negotiate term sheets, complete lender diligence, resolve intercreditor and lien issues, choose the primary route and activate the contingency if signing risk remains Executable terms, closing checklist, owners, conditions and funding date
3 to 1 month Sign definitive documents, satisfy conditions, secure payoff and release mechanics, protect payroll and tax liquidity, and have restructuring counsel ready if funding is not certain Signed documents and funded closing, not verbal confidence
Final 30 days Manage cash daily, comply with notices and reporting, update the board frequently, stop discretionary uses of cash and execute the approved contingency before the company loses control of timing Cash, legal duties and stakeholder actions controlled day by day

If you are already inside six months, compress the timetable but keep the sequence. If you are inside 90 days without signed terms, treat the contingency as an active workstream, not a board appendix.

A numerical example: runway is not maturity capacity

Assume a company has $4.0 million of unrestricted cash, burns $250,000 per month after scheduled debt service, and owes a $4.5 million payoff in nine months including principal and final fees. Management’s minimum operating cash is $1.2 million.

At the current burn, cash immediately before maturity would be approximately $1.75 million:

$4.0 million opening cash minus nine months × $250,000 burn = $1.75 million.

The company appears to have 16 months of headline runway today, but it cannot make the payoff in month nine. It is $2.75 million short of paying the lender and $3.95 million short if it must also preserve $1.2 million of operating cash.

Now assume management reduces burn to $100,000 per month after two months. Cash before maturity improves to $2.8 million. The company still has only $1.6 million available above minimum cash, leaving a $2.9 million maturity funding need.

If current performance supports only $2.0 million of sustainable replacement debt, the remaining $900,000 plus transaction costs must come from equity, an asset sale, further cash creation or a lender concession. This is why the first question is not “Can we refinance $4.5 million?” It is “What debt can the company support, and how will we fund the difference?”

The example is illustrative and excludes taxes, working-capital volatility, covenant effects and transaction fees beyond the stated final fees. Use the company’s actual documents and monthly cash flow.

Build one lender-ready evidence pack

Every capital provider should receive numbers from the same controlled source. Prepare:

  • executed loan, security, warrant, amendment, waiver and intercreditor documents;
  • a reconciled debt schedule and payoff build;
  • monthly historical profit and loss, balance sheet and cash flow statements;
  • current revenue, margin, retention, concentration and unit-economics evidence relevant to the business model;
  • a 13-week cash forecast and monthly base, downside and management-action cases;
  • debt service, minimum-cash and covenant calculations using contractual definitions;
  • a collateral, lien, guarantee and account-control schedule;
  • a sources-and-uses schedule for every option;
  • board approvals, cap table and documented investor support;
  • a short account of performance since the original underwriting; and
  • the exact request, repayment source, process timetable and closing conditions.

A lender can work with weaker performance more easily than with inconsistent information. Reconcile ARR or revenue, EBITDA, cash, debt and runway across the board deck, lender model, financial statements and data room before outreach.

What commonly goes wrong

  • Treating an expected round as cash. Until committed and fundable, it belongs in a contingency case.
  • Starting at 90 days. Documentation, diligence, consents and credit decisions can outlast the remaining runway.
  • Sending an equity pitch to a lender. A lender needs repayment, downside, liquidity, collateral and covenant evidence.
  • Asking for time without fixing the structure. A new date does not solve recurring burn or an unsupported debt balance.
  • Comparing rates only. Include amortization, fees, minimum cash, warrants, cash sweeps, covenants and usable proceeds.
  • Spending below minimum cash to reduce the payoff. The company can become unable to operate even after satisfying the lender.
  • Hiding an actual or forecast breach. Check notices, certificates, grace periods and legal consequences with counsel.
  • Treating an unsigned extension as closed. Maintain the fallback until documents are signed and all conditions can be met.
  • Ignoring tax and lien mechanics. A discount, conversion, asset sale or payoff can fail late if tax, security and release issues were never mapped.
  • Waiting to prepare restructuring options. Advice obtained while cash and records are controlled is more useful than advice obtained after a missed obligation.

Your next step: calculate supportable debt

Before asking a lender to move the maturity, estimate what the business can support on current performance. Use Alehar’s Debt Capacity Calculator with current revenue, EBITDA and balance-sheet information, then compare the result with the complete maturity payoff.

The difference is not automatically a refinancing request. It is the amount that must be funded through cash above the operating minimum, equity, asset proceeds, a lender concession or a smaller operating plan. Re-run the analysis for the downside case and for the business after proposed cost actions.

The calculator is a first screen, not a commitment from a lender. Venture and growth lenders may also underwrite recurring revenue, investor support, collateral and milestones. The result gives founders and CFOs a disciplined starting point for the lender conversation and exposes whether the company is trying to refinance debt it can no longer carry.

How Alehar can help

Alehar can help management build the maturity model, compare extension, refinance and equity paths, prepare lender materials and run a controlled financing process. Learn more about Raising Equity or Debt, or contact us before the timetable becomes the main constraint.

Sources checked