Deal Type: Working Capital
Loan Amount: £100k
Loan Type: Reparo
Security: First ranking debenture, personal guarantees and chattels charge over independently valued IT equipment
Region: Midlands
Reparo was approached by an IT consultancy to provide a loan to help it deliver a marketing plan. Having repaid 50% of the original Reparo loan, the company wanted to extend the loan back to £100k.
The team visited the three founders to understand the purpose of the loan and how it fitted into an overall vision for the business. The team were all industry veterans with a clear plan.
In spite of the directors’ experience and sensible planning, the company has struggled to raise funding. There were several reasons that the business struggled to raise the capital it needed:
- A primary revenue stream for the business was consultancy work, which generated inconsistent cash flow.
- The security was IT equipment, which isn’t favoured by traditional lenders due to its potential for depreciation and challenges regarding valuation.
- Invoice financing wasn’t viable because the sales ledger was highly concentrated on a small number of high-value clients.
Reparo is always happy to take a closer look at a business to assess the lending proposition. At the time of the first loan, the team visited the company and was able to help for a few key reasons:
- The IT equipment was valued by a specialist that provided assurances on its value. Reparo’s capability to deliver quick and accurate valuations through trusted partners enables loans to be completed quickly.
- By meeting the senior team, Reparo was comfortable that the business had a strong value proposition, strong management and a clear plan for how to use the funds.
After 18 months of working with the business, Reparo has a clear picture of the cash flow and operating model – it was this that made them comfortable to process the second loan quickly.
A few simple checks on recent financial performance and directors meant Reparo was able to act quickly to provide the funding.
Reparo relationship manager Jason Cossey said: “After the first loan, we spoke to the client regularly; this dialogue gave us a clear understanding of the business, so when they applied to extend the loan we were able to move quickly.”
Reparo managing director Andrew Ward commented: “Traditional lenders generally shy away from IT equipment as security, whereas we have a great network of valuers that mean we can arrive at a fair valuation. In this case, we completely trusted the valuation and were happy to proceed with the loan. Without taking the time to understand the business and engage a specialist valuer, it would have been a difficult deal to process – this is a classic example of how Reparo always goes that extra mile when working with clients or brokers.” To discuss a loan of between £10,000 and £1m, please get in touch with one of the team on either sales@reparofinance.co.uk or 0161 451 5710. You can find out more about us on our website: www.reparofinance.co.uk.