The Situation

An eco-friendly car rental business that specialised in all-inclusive electric car subscriptions. Led by technology, customers could effortlessly order, unlock, and arrange collection of a car all from their phone. The agreements were all designed in favour of the customer. As the business took care of the wear and tear, servicing, and charging costs, all at no extra expense.

After trading for two years, the company had amassed a fleet of over 400 cars. Thanks to their flexible and easy to use collections and return processes, they had built up a waiting list of over 300 customers.

To satisfy demand, the owners made a great deal with 3 OEM manufacturers. To buy 80+ cars straight from production at a sizeable discount. The company also made extra savings thanks to the government’s new car plug-in grant for electric vehicle purchases.

The business received the majority of its finance from equity investors. However, the owners wanted a solution to raise working capital finance for the cars without further diluting their equity. Having only traded for two years and needing finance within weeks to secure their order, mainstream funding proved tricky to deliver on time.

Where We Came In

We understood the business opportunity for the client and wanted to help them secure the purchase imminently and expand their business.

A lot of funders were uneasy around the interest servicing and taking security over rental vehicles that depreciate in value. In contrast, we were happy to support the business’ request based on the demonstrated future rental income of the cars and were comfortable in lending up to 80% LTV against the cars.

It was therefore arranged that we would lend £2.5m against the 80+ cars, directly to the SPV the owners wanted to hold the cars in, for a short-term period of four months.

This £2.5m, four-month funding injection would allow the owners to purchase the cars at the discount available, install their technology into them and begin renting them out. Following this, when the business had successfully demonstrated the cashflow generated from the larger fleet, a refinance could be arranged with a longer-term lender.

Term: 4 Months

Timing: 2 Weeks

Security: Chattels mortgage over the cars | A debenture | Corporate guarantee | Personal guarantees

The Result

As promised, we lent our client the funding they needed in less than two weeks. They purchased the cars and had them on the road within the same month. Shortly after, the VAT refund from the vehicle purchase was claimed and allowed the client to make a significant reduction to our loan. The cars were fully rented out and evidenced the business’ concept to mainstream funders which enabled them to complete a refinance of our funding with a longer-term corporate lender.

Ultimately, supporting the business with their growth ambitions without the need to dilute equity.