Restructuring Floundering PRIs

In some circumstances, the foundation has “called” its collateral, which could be in the form of real property, general liens, or cash collateral. In other cases, the foundation has restructured the loan to extend the repayment period or accelerate repayment. “More often than not,” he concluded, “it’s just a matter of engaging to understand what they are doing. If they come up with a plan, you go with that. You monitor quarterly performance, and keep a close eye on things.”

It's important to ensure consistency. “If one investee defaults without consequence, others will look around and say, ‘They’re not serious about getting paid back.’” More broadly, some funders argue, allowing borrowers to default without consequences distorts the market for PRIs.

Takeaways are critical, bite-sized resources either excerpted from our guides or written by Candid Learning for Funders using the guide's research data or themes post-publication. Attribution is given if the takeaway is a quotation.

This takeaway was derived from Program-Related Investing.