Going the extra mile?
Sometimes, as a commercial finance broker, you source a new client in need of urgent funding, only to find each door along the corridor of lenders is firmly shut.
What do you do?
The story of how a broker went the extra mile for his client and instead of arranging funding, managed to find them a lifeline.
Try and go the extra mile for the client.
As a commercial finance broker, I work with an approved panel of lenders. This is a mixture of specialist and multi-product funders, offering Equipment Finance, Equipment Refinance, Invoice Discounting, Trade Finance, Stock Refinance, Business Loans, Asset-based lending, Secured Loans, Property Development Finance, Bridging and Capex Credit Lines.
If you include ALL of these, the number is well above 50 lenders on the panel.
However, there comes a time when you just can’t find the answer to your new client’s predicament from this panel of lenders.
This is where a seasoned, independent broker should be thinking about off-panel answers for his client, and going the extra mile for them.
Background:
The case in question is a seven-figure turnover SME, working in a specialised field, with off-site staff all over the country, often with overnight stays required.
Like most SMEs, the company was a hostage to the winds of fortune. Cash flows had to be consistent to ensure the remote workers could honour their contracts. This meant funds had to be available to meet fuel and hotel costs, not to mention keeping up the asset finance repayments on an extensive list of vehicles and essential kit.
During the lockdown periods of 2020-22, the impact on the business was significant, from closed hotels to restrictions on travel meaning a reduction in revenues.
However, salaries still needed to be paid and finance agreements honoured.
This meant HMRC bills couldn’t be paid on time, and the cumulative effect resulted in a six-figure debt building ever higher each year, which ultimately reached a tipping point, forcing the client to arrange a TTP (Time to Pay).
Unfortunately this direct approach resulted in a punishingly short TTP, with huge monthly commitments which were, in effect, crippling the company.
First Attempts:
Initially, we explored the lending panel to find a loan funder able to consolidate all the monthly commitments into one lengthy repayment term, but each proposal failed.
We then looked at the list of equipment, both unencumbered and financed, to see if we could refinance them all to raise a decent chunk of capital from which to reduce the HMRC liabilities.
Again, try as we might, this approach also failed - every hurdle was placed in our way.
Over the years, when faced with the unsecured route being closed I have then looked at the bricks and mortar owned by the director(s) - this could be their personal properties, a BTL portfolio, land or commercial premises.
If the LTV is evident in any of these (the loan to value), we can instead raise competitively priced secured loans via charges over these assets. These do in fact have many advantages over the normal unsecured route: repayment terms up to 10 years (keeping the capital repayment low), interest only periods to help with cashflow, repayment holidays, and even uplifts.
However, even this door remained firmly shut.
The Extra Mile:
In my inexpert opinion the company was getting very close to failure, primarily through no fault of their own.
Instead of tipping over into administration and the dark days of winding up, I felt they needed a brilliant turnaround practioner.
It seemed to me that there was something worth saving here, so to that end, I sent a message to Keith Steven of Company Rescue, an industry expert I have known for three years, asking him to look over the key details and to confirm if there was indeed a chance to ‘rescue’ this business.
It turned out to be the case.
Fast-forward a couple of months, and Keith and his team have secured a six-figure 30-month TTP (time to pay) with the HMRC, and additionally some debt restructuring.
In less than three years the business will hopefully have come out the other end of this very trying period of trading and be facing a positive, sustainable future with a strengthened balance sheet and a new vigour and spring to their step, all thanks to Keith and his team.