£140,000 refinance for an off-licencePublished on 3rd January 2020 2020-01-03T12:00:00+00:00
Cashflow is a challenge for any business, and it can be such a worry to owners that they may grasp at any solution that helps keep the business afloat. However, there are many financial solutions available - and choosing the wrong solution may make matters far worse.
We were recently approached by a North London off-licence owner who had worked with a broker in the past - but who had provided such poor advice and brought in such inappropriate and costly products that the business was close to going under.
“We have a thriving off-licence business. It is small, but because it is a family business, we have a big advantage in that we don’t have staff to pay! Not only that, we have a good position on a busy street. So although it can be long hours and hard work, it can mean plenty of custom.
But like any business, we have had ups and downs. We’ve had funding needs - but what we didn’t have was the right answer to them.”
The owner had worked with a conventional broker, who had persuaded him to take out a series of loans - and gone on to make things worse by introducing a business credit card. This made things very easy when going to the wholesaler to buy in stock - but the high interest rate made life much less simple when it came to paying off the balance.
The owner was faced with debt repayments on loans which were draining away the profits, while the debt on the credit card was steadily going up.
“It had got to the stage where I was worried about whether I could afford to restock the shelves.”
Realising that his business was in serious trouble, the owner approached us at Rangewell. We saw that he needed a solution fast.
We saw that his problems were complicated, but the immediate need was to refinance the outstanding debts. By refinancing and consolidating the various existing loan commitments into a single arrangement he could have:
Reduced interest costs - By refinancing to a lower rate, and perhaps to a more suitable type of loan, it may be possible to save on interest costs and reduce in monthly outgoings
Reduced monthly repayments - Consolidating loans would mean that he could extend the terms of his lending - again cutting his monthly costs.
Increased borrowing - making better use of lending could allow more funds to be provided, which might provide a way to provide extra working capital.
Rather than simply approaching his existing lenders, we looked into the possibilities of refinancing with another supplier. We have found that this approach can often provide the type of reduction in cost that clients need - especially when coupled with our expertise, which would allow us to select the most appropriate lender and the most competitive deal to cover his needs.
We looked at our client's accounts and saw that his business was, basically, profitable and that if we could find a way to pay off the debts he had amassed - including the credit card which was causing so many problems - we could help him recover.
We approached various lenders who work in the refinance sector and shared our findings with them. We explained that the client's business problems we caused by bad advice about lending in the past, and that his business was not only sound - but with the right financial support, it could be highly successful.
We were able to find a lender which could cover all his existing loan commitments and replace them with a single loan. Our ability to work with all lenders across the market ensured that his rate was lower, and his monthly repayments were more manageable.
The rate we found was substantially lower than those of his previous loans, and he was able to reduce his repayments to a figure that would have a much-reduced impact on his monthly cash flow.
£140,000 at just 8% over 5 years
In fact, the loan rate we arranged for him was so affordable, he was able to easily increase it by £50,000 - which would allow him to buy in a huge quantity of stock to ensure a very busy - and profitable - Christmas season.
At Rangewell we can help you arrange all types of funding for your business to find out more, simply call us or find out more.
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