In this case, we were approached by a business owner that was looking for a loan of £10 million for their company. The client was looking to refinance an existing £9 million facility that was no longer competitive and raise a further £1 million to improve the company’s cash flow, which was expected to have a positive impact on the company’s future operations and growth.
The client initially approached us asking that we arranged a stock loan, as they thought this would be the cheapest and most logical route to raise the liquidity needed. The client had also considered the value of their stock and the amount they wanted to borrow, and with the amounts tallying up (about 50% LTV), this initially made sense.
However, when we explored the clients’ business, requirements, and assets further, we believed that multiple facilities against different security would be the most logical, efficient and cost effective. We therefore arranged a £5 million invoice finance loan, a £2.5 revolving stock loan and £2.5m unsecured term loan to deliver the full amount the client needed.
The facilities we arranged allowed the client to achieve a ‘dual’ funding package that covered the front-end requirements (through the stock loan and term loan which allowed them to purchase more stock which they were in a unique position to leverage) as well as a back-end solution (invoice loan) which would help with the required refinance. The solution meant that the client could utilise the capital raised as efficiently as possible and effectively maximse what they could achieve with their liquidity.