£2 Million, Unsecured Business Loan Without Personal Guarantee Requirement

CORPORATE FINANCE ASSOCIATE

Chris Davey

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Key Facts

Borrower: Online retailer in the FMCG space

Financing Requirement: £2 million loan

Reason For Borrowing: An opportunity to purchase additional, high-demand stock

Details: Unsecured loan at 8% (plus base rate), with no personal guarantee required

In this case, we were approached by a UK, online retailer that operates in the FMCG space. The company wanted to raise finance that would allow them to make extra stock purchases as they were experiencing high demand for certain items of stock. However, their financial position didn’t allow them to purchase as many of the items as they wanted to take full advantage of the situation. The client was looking, if possible, for an unsecured loan.

While the company’s strong financial position made an unsecured loan a possibility, we knew that lenders would usually want to put additional measures in place to reduce risk as much as possible, and in such cases, personal guarantees are common. This was a challenge because the main shareholder of the business was based in India, which can be seen as a higher-risk jurisdiction, and given their residency, it gave the transaction a multi-jurisdictional angle that made financing more challenging. 

However, we were able to source and negotiate with a lender willing to offer the loan without needing a personal guarantee. To secure the loan, we had to carefully walk the lender through the company’s financials, the projected cash flow and profits that the additional stock purchase would allow, highlighting that this represented a relatively low-risk lending scenario.  

As a result, we were able to secure our client the £2 million unsecured loan that they were looking for, without the need for a personal guarantee. We negotiated a rate of 8%+ bank base rate, which was exceptionally competitive given the fact that the loan was unsecured and didn’t require a personal guarantee.