The Client:
The client is a payroll services business seeking £250,000 – £350,000 of working capital to facilitate ongoing growth of their business. The client wanted to be able to have a facility that would allow them to grow the business over a 3 year period to invest in marketing, new staff and upgrading their office to accommodate the increased demand for their business. The client had no business assets so to speak, however they did have assets in the background that could be used as security to strengthen the case.
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The Solution:
As the client was looking for a large loan, it was important to ascertain what assets were available to be used as security and also understand what the turnover level was for the client. The client’s business had shown positive growth over the last 3 years, evidencing a high level of turnover and sufficient amount of net profit which was favourable for the Lenders.
The client had enough equity in two properties in the background to place an equitable charge over both of them.
We were able to secure the customer 2 finance offers:
a) Either an unsecured loan option of £150,000 initially, or
b) £217,000 if using the two properties in the background as security.
Although the business could support a higher loan amount, since the business had just one sole Director, the preferred Lender caps their loan sizes due to their only being one Personal Guarantee.
Whilst the initial loan was not as high as initially hoped, however the selected Lender provides flexibility – i.e. so long as the client maintains regular repayments over a 3-6 month period, then the Lender can offer further “top-up loans” to allow the loan to grow alongside the business. These funds will allow the company to grow as per their 3 year plan and subsequently, with the option of the top-up loan, provide a suitable longer term facility to support the business as it expands.
In terms of timescales, from the initial submission of the application to the lender, it took just 9 working days for the funds to be released to the client, who was delighted with the excellent terms we secured for their business.
Key Points to Consider:
As a general rule, if the client has assets or is a Homeowner, financial providers can often lend between 15% – 25% of the business turnover.
Please keep in mind that these are only broad guidelines. Each case is looked at individually and treated on its own merits.
Summary
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