21st October 2019

Case Study: Easing the burden for broker and client

A professional couple acquired a guest house with a view to repositioning it as a premium multi-channel hospitality offering. Their business in the hospitality sector had been reliant on high-cost forms of finance to fund the improvements and refurbishment of this seasonal business, as the trading history of the business was fairly short, albeit trending positively. Over time, they found the high-cost debt was suppressing their cashflow, which was felt particularly acutely during the off-peak season and preventing re-investment of surplus cash. As a result, their business growth plateaued.

The company were looking for working capital for refurbishment and to continue with their plan to open new hospitality offerings at the property. They worked with their broker, Samantha Thorpe of Premier SME Funding -a trusted and long-standing broker of ours, to investigate possible solutions to help ease the burden and who subsequently introduced the business to Credit4, having been made aware of our new Secured Business Funding product.

Credit4 regularly work with Premier SME Funding and they know that the products we offer are flexible, straightforward and transparently priced. Samantha said: “For me, it’s great as Credit4 take the case on and liaise directly with the business, freeing me up to work on new business.  In this particular case, my client was delighted with the support that he received, allowing him to continue to grow his business.” 

We were able to see that a very good solution, in this case, would be to consolidate the company’s existing high-cost debt using our Secured Business Funding product. Secured Business Funding launched earlier this year and is designed for growing SMEs who need access to amounts of between £75,000 and £250,000, for terms of between 12 months and 5 years, ideal for businesses that need access to longer-term finance or to release cashflow where it is being suppressed by servicing existing high-cost debt. The funding is unsecured against the business, backed by personal guarantees from the Directors of the business and a charge against a suitable property of a personal guarantor.

We provided the company with a £116,000 loan at 80% LTV, based on a 180-day valuation. The LTV available allowed the client to raise the funds they needed to expand their business and refinance short term, high-cost debt, easing the associated cashflow burden and thereby releasing further working capital into the business.

As with our Flexible Funding and Dual Growth Funding products, Secured Business Funding was launched after listening to feedback from our broker community. We are delighted to see the product being well received and our team are committed to ensuring both introducers and clients have the support they need.

Originally featured in NACFB Commercial Broker