The Situation

Business working capital loan for an established food manufacturing company completed in less than ten days.

Supplying the nation with their 5-a-day, and heaps of mayonnaise, this business was established in the early 1900s. They were originally potato merchants and steadily, over time, grew to become one of the UK’s leading vegetable processors, supplying major brands such as Morrison’s, Aldi and Lidl.

Their constant innovation and acquisitions saw this business at the forefront of food. Adding to their processing operation, they had built up a successful in-house distribution arm that could ensure nationwide deliveries to customers within just 24 hours of ordering.

As with any vegetable processor, the quality of the harvest was critical to keeping the wheels of the business turning and trading profitable. One-year, a poor harvest caused by bad weather, accompanied by a disproportionate increase in operating costs, led to a tough trading period and squeezed the business’s working capital and cash flow.

To help achieve their growth up until this period, the bank had been a vital funding partner for the business, supporting their growth strategies for several years. Although, because of the increased costs incurred by the business and its overall effect on profitability, this sadly meant that the bank was unwilling to support the business with the business working capital loan that they needed at this time.

Where We Came In

Despite this, the owner was hopeful that these effects were not to be permanent and trading conditions would soon be rectified. However, to cover the cash short-fall and sustain operations in the interim, the owner needed a short-term working capital loan of £750,000 within a two-week timeframe.

When searching for finance, the business faced objections from traditional funders. As they had already leveraged their assets to support the business’ existing funding facilities, coupled with concerns over their current trading environment.

Shortly into their search, the business was introduced to us by their accountant who had worked with us in the past and knew that we could offer the flexible solution the client needed in the tight timescales available.

We met the directors and went in search of a proactive and creative solution, deciding that the quickest and most tax-efficient approach to their funding needs was to lend to a separate business that the owners operated. We took security over assets unrelated to the main trading company and provided the owners with the £750,000 that they needed within a week. The working capital was then injected via an intercompany loan into the main trading company.

Term: 9 Months

Timing: 10 days to complete

Security: 2x 1st legal charges over buy to let properties | 2x 2nd legal charges over BTL and residential properties | A personal guarantee

The Result

The director was pleased with the flexibility of being able to use assets outside of the business to secure the funding and was impressed by how quickly we sent the funding over. The client also found our approach reassuring by the time we had taken to properly understand the business and the trust we placed in the management team to deliver their plan and overcome this setback.

Within six months, the business was back on track and was able to refinance its funding with the bank. We were also happy to leave our funding in place a little longer than originally planned, to allow the business to maintain a larger working capital cushion in case of any unforeseen events.