The range of circumstances in which asset refinance can aid SMEs is wide and varied. As years go by it can also provide multiple solutions for the same company.
Such a situation was illustrated recently at Praetura Asset Finance, when we received a new enquiry from a precision engineering company that our refinance funding had assisted in 2019.
Back then, the fortunes of the business were close to breaking point. Following a tumultuous trading period, the well-established business had seen its net worth eroded and substantial debts built up with HMRC. When Praetura Asset Finance were introduced to them (by their commercial finance broker Metis Funding) the business needed to raise funds to allow existing finance agreements to be settled and facilitate a pre-pack administration.
One of the many advantages of working with a consultant lender is that we will take the time to understand the whole picture of a business. Our decision was not based solely on the current circumstances, but after Business Development Manager, Paul Mountain, met with the business owners, we were able to take into consideration the historical conditions and future plans for the business as well.
Working alongside their Insolvency Practitioner, Corporate Financier and two lawyers, Praetura Asset Finance structured a refinance funding package totalling £400,000. This paid off existing finance with six incumbent funders and raised additional capital to allow the pre-pack administration to go through. Consequently the business was saved and multiple jobs were secured.
Fast forward two years and the funding requirement was much different, yet asset refinance once again provided the ideal solution.
In the intervening two years, the business had been trading well, but day-to-day cash flow levels were being hampered by repayments of a bridging loan that had been taken out as a means to keep the business afloat in 2019. To enable the business to progress they were looking to raise additional funding to realign the company’s financial position.
Praetura Asset Finance were able to raise the capital required by arranging a ‘re-draw’ on their existing refinance facility which released the funds required to repay the bridging loan in full. By extending the term of the refinance agreement this reduced those monthly repayments too. Overall this provided the business with a reduction in their monthly outgoings of over £3,800.
Conversations began between Praetura and the company’s broker towards the end of May. Within two days of the official proposal being submitted to our credit team the deal was approved and by the end of the following week the bridging loan had been paid and the new refinance funding facility was in place.
Business Development Manager Paul Mountain commented: “One of the key benefits of asset refinance is its diversity and the simplicity of utilising something a business already has (in this particular case, multiple pieces of engineering equipment) to raise capital. Plus, it’s not just a one-deal solution, as in this situation we were able to facilitate a re-draw on their original refinance facility; those same pieces of equipment provided the solution again!”.
With the strain on the business’ day-to-day cash flow levels alleviated and a substantial portion of debt cleared, they are now in a much stronger position and to fulfil the potential progression of the business.
In the beginning refinance funding allowed the business to survive. The new facility will allow the company to thrive. When they need to invest in new equipment as the company grows and takes on new contracts, asset finance will be able provide the ideal solution for that funding requirement too.
Exclusive refinance relief funding
At Praetura Asset Finance, we are proud of the reputation we have built over the years, especially for our expertise in structuring refinance facilities to the specific needs of each individual business.
Currently available from Praetura are refinance relief funding facilities which include the exclusive added bonus of up to nine months interest-only payments, to further assist cashflow reserves in the short term*. Find out more about refinance relief funding: www.praeturaaf.com/refinance-relief-in-action.
We work in partnership with a wide range of asset finance brokers, commercial finance brokers and business finance advisers throughout the UK.
Praetura Asset Finance are a patron of the National Association of Commercial Finance Brokers (NACFB), who are an accredited trade body representing over 1,900 commercial finance brokers in England, Wales, Scotland and Northern Ireland. A list of member brokers can be found on their website: www.findsmefinance.co.uk.
*Terms and conditions apply. The number of months interest-only payments offered will be dependent on the loan to value percentage of the equity in the assets being refinanced. Please speak to a member of the Praetura Asset Finance team to find out more.