Asset Finance Manufacturing
Start-up Wirral
This deal involved the start
up of a manufacturing business on the Wirral by a mature team
of directors. The initial requirement was finance for plant
and machinery essential to commencing production.
Having already approached their own bank
and another broker the proposed start-up was only half funded.
This situation was less than ideal as we had to pick up the
case ‘half way through’ after a manner of speaking.
Further to this, as a start up, the business had no track
record although the directors had a good deal of experience
in running businesses around the Liverpool and Wirral area.
The fact that the business was a start up reduced the number
of possible lenders and therefore the choice of available
deals.
The plant and machinery requiring funding
by this business was a specialist, bespoke, production line.
When valued by the plant and machinery valuer a further complication
was encountered in that the valuation came in at a fraction
of the purchase price. This obviously led to the funder asking
for additional security from the directors. Based around Wirral
and Chester the directors looked to their personal property
to provide the additional security. After some negotiation
two of the directors offered second charges against their
own properties.
The need for additional security emphasized
the perceived risk that the directors were taking in borrowing
to this extent against assets commanding low valuations. However,
the directors were obviously confident of the viability of
the company. The reasons underlying this were closely related
to the advance order book secured from copious connections
in the Wirral area.
A further funding requirement to provide
a small fleet of vehicles was much simpler to place. This
finance is very much supported by the value of the vehicles.
The vehicles, which were all new, were supplied direct by
the funder. In this way the Wirral based client company could
commence trading immediately. A full service contract was
entered in to, entitling the company to servicing of the vehicles
and an accident management service.
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