Structured Financing: A Tailored Solution for Businesses with Complex Financial Needs

eCapital UK

Last Modified : Mar 27, 2025

Companies with unique financial profiles, poor credit ratings, or complex assets face a challenging task when attempting to raise capital through traditional financing arrangements. Standard financing models may not always align with the needs of companies with unique asset profiles, complex revenue streams, or unconventional business models. This is where structured financing plays a vital role—offering tailored financial solutions that provide greater flexibility and access to funding.

Structured financing leverages non-traditional assets, securitised instruments, and hybrid capital structures to create innovative funding arrangements. This guide explores structured financing, how it works, its benefits, and the industries that rely on it.

What Is Structured Financing?

Structured financing refers to a set of advanced financial instruments designed to meet specific funding needs. Unlike conventional loans or equity financing, this type of financing often involves complex arrangements such as asset-backed securities, collateralized debt obligations, or mezzanine financing.

Key Features of Structured Financing:

1. Customisation – Tailored to align with a company’s financial strategy and growth objectives.
2. Asset-Backed – Uses tangible or intangible assets as security for financing.
3. Risk Management – Spreads financial risk across multiple stakeholders.

How Does Structured Financing Work?

1. Assessment
   • Financial experts evaluate the company’s asset base, revenue streams, and capital requirements.
2. Structuring the Deal
   • A financing package is developed, combining different instruments such as debt, equity, or asset-backed securities.
3. Implementation
   • The structured finance arrangement is executed, enabling the business to access the required capital.
4. Repayment & Monitoring
   • Repayments follow a tailored schedule, often aligned with cash flow cycles or revenue performance.

Types of Structured Financing Instruments

1. Asset-Backed Securities (ABS)

Companies convert future cash flows into immediate capital by securitising receivables, leases, or loans.

2. Collateralised Debt Obligations (CDOs)

A pool of debt instruments is grouped and structured into investment-grade securities, offering investors various levels of risk and return.

3. Securitisation

Businesses bundle financial assets into tradeable securities to unlock liquidity from long-term receivables.

4. Mezzanine Financing

A hybrid of debt and equity, where lenders provide capital in exchange for equity-linked instruments or subordinated debt.

5. Structured Credit Products

Custom-built credit solutions designed for risk-sharing and capital optimisation.

Benefits of Structured Financing

1. Access to Capital

• Helps businesses secure funding for large-scale or complex projects that may not qualify for traditional financing.

2. Enhanced Liquidity

• Converts illiquid assets into cash, improving working capital and financial flexibility.

3. Greater Flexibility

• Customised repayment terms align with business needs and cash flow cycles.

4. Risk Mitigation

• Spreads financial risk across different funding sources, reducing exposure for the company.

5. Cost Efficiency

• Often more cost-effective than equity financing, minimising ownership dilution.

Industries That Rely on Structured Financing

1. Real Estate

Property developers use structured financing to fund large-scale developments, leveraging real estate assets or projected rental income.

2. Renewable Energy

Energy firms use structured finance solutions to fund solar, wind, or infrastructure projects by securitising long-term energy contracts.

3. Transport & Aviation

Airlines and logistics companies finance fleet expansions by securitising future ticket sales or long-term freight contracts.

4. Technology & Startups

Tech firms rely on mezzanine financing or structured credit to bridge funding gaps while retaining operational control.

5. Manufacturing & Industrial

Manufacturers secure funding for equipment purchases or production expansions, backed by inventory or receivables.

Challenges of Structured Financing

1. Complexity

• Requires expert financial structuring and legal oversight, making the process more time-intensive.

2. Regulatory Compliance

• Businesses must navigate strict financial regulations, which vary across industries and jurisdictions.

3. Higher Costs

• While cost-effective in certain cases, structured financing can involve higher upfront fees and ongoing management costs.

4. Market Dependency

• Some structured finance instruments, such as securitisation, depend on favourable market conditions for success.

When Should Businesses Consider Structured Financing?

Structured financing is ideal when:

• Traditional loans are not suitable due to business complexity.
• Significant capital is required for acquisitions, projects, or expansion.
• The company holds valuable assets that can be leveraged.
• Risk mitigation is essential to balance financial exposure across stakeholders.

Real-World Example: Structured Financing in Action

Scenario:

A UK-based renewable energy company plans to build a wind farm but requires £50 million in upfront capital.

Solution:

The company securitises long-term power purchase agreements (PPAs) with energy buyers. This allows investors to receive predictable returns, while the company raises the capital required for development.

Outcome:

The business accesses funding without traditional debt, enabling expansion while managing financial risk effectively.

Conclusion

Structured financing is a powerful alternative to conventional lending, providing companies with tailored financial solutions for growth, risk management, and liquidity enhancement. Whether businesses seek to fund large-scale projects, optimise their balance sheets, or unlock the value of their assets, structured finance solutions can open doors that traditional methods cannot.

Given the complexity of these financial arrangements, working with experienced financial advisors and specialised lenders is essential to structuring the best solution for your company’s strategic goals.

Contact us whether you’re expanding operations, launching a large-scale project, or optimizing your financial strategy. eCapital can structure a financing arrangement to help you unlock your business’s full potential.

Key Takeaways

• Businesses with complex financial needs or non-traditional asset structures often struggle with standard financing.
• Structured financing provides tailored, asset-backed solutions to secure capital while managing financial risk.
• Industries such as real estate, renewable energy, transport, and manufacturing rely on structured finance to fund large-scale projects.
• Working with specialist financial advisors is key to optimising the benefits of structured financing.

eCapital UK

eCapital Commercial Finance (eCapital) is a leading invoice financier providing funding facilities up to £4m to support the growth of SMEs through the provision of flexible working capital facilities. With five fully functional UK regional offices, its local teams are uniquely placed to respond promptly and purposefully to the cashflow needs of its clients. The business has grown significantly since its launch in 2001, providing over £12 billion of funding to businesses. It is majority owned by eCapital, a US based financial services business with interests in the USA and Canada.