£150,000 fit-out funding for a nursery: cutting the cost of growthPublished on 18th October 2019 2019-10-18T11:00:00+00:00
If your clients include childrens nursery operators, you will know the financial challenges they face. Owners face restrictions on what they can charge per child, and overheads are high. You may advise a small nursery to grow its numbers as the best route for profitability - but space requirements are specified by the regulations.
What’s more, many parents - and children, and probably staff - may prefer a smaller facility with a friendly atmosphere. They will actively seek out a small nursery, and even be prepared to pay more for a place where there are not too many children competing for attention.
We recently helped an accountant find a solution for a nursery operator who had no choice but to grow her business.
“We didn’t have any more room - even though we had built a great reputation and had plenty of parents knocking on our door.”
The accountant's client ran a nursery serving a commuter town and had premises close to the railway station - an ideal position for parents dropping off their children before heading off to work.
However, when a major development plan was proposed, it was clear that the nursery would need new premises - and need them fast.
Fortunately, the developers were sympathetic, and were able to offer alternative premises nearby.
“The offer was a good one financially, and we saw that the new premises would allow my client to offer more places and to grow her business - but the unit was a bare shell, and would need a complete fit out before it could be used as a nursery.”
The unit would offer a more spacious environment with more opportunity for active play. It might be possible to provide 60 or 70 places - but the costs involved were daunting.
“My client looked at the costs involved, and realised that she would need to spend around £150,000 to fit out the interior to meet all the regulatory requirements. She came back to us to help her find the most cost-effective way to provide the funding. We contacted Rangewell on her behalf.”
At Rangewell, we can help provide any kind of business funding - and the first step in our process is to find the most appropriate source of funding for a particular need.
In many cases, business equipment can be provided by Asset Funding. The items acquired act as security for the loan, which means that rates as low as 4% can be offered - because the lender can simply repossess the equipment if the business defaults on payments.
However, when fitting out much of the cost will be for the work involved with decorating and construction, and for ‘soft’ assets such as carpet. These have no potential resale value which means that they cannot be covered by conventional Asset Funding. It may be necessary to arrange a business loan to cover the work - which can often be more expensive.
“Our client received quotes from a leading lender which would mean paying 11% interest on a loan over five years - which would mean repayments that we felt would simply not be affordable from our client's limited cashflow. We hoped Rangewell could do better.”
We saw tha,t by splitting the funding into two parts, we could cut costs. We developed a loan package which would provide Asset Funding for all the equipment - seating, lighting and heating systems - and cover the rest with a Secured Loan.
We approached a number of high street banks. By approaching those we knew were sympathetic to the sector, we were able to get a loan secured on the owners home for the balance required at just 6% and to spread it over ten years. Her accountant believed that the repayments would be affordable.
At Rangewell, we work with over 350 lenders to offer you an overview of more than 23,000 business finance products. We work closely with accountants to help find the most appropriate - and affordable - funding solutions for their clients.
Simply call us on 020 3637 4150 - or email [email protected] Our service is free.
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