Acting fast: Funding to buy £400,000 worth of stock - for £100,000

Some business sectors - and some geographical locations - can face additional challenges when raising cash. 

Small businesses, and especially sole traders, can be at a disadvantage when it comes to raising larger sums. In addition, some lenders are wary of the motor trade, where business fortunes can change very rapidly.

Businesses based in Northern Ireland can also suffer from a lack of local lenders.

We recently provided a solution for a business that faced all these issues - a loan that was key to the survival of the business.

The challenge

Our client was a custom vehicle business based in County Antrim. Their key activity was fitting tuning equipment to a range of customers’ vehicles, including Ford and Vauxhall models - and they depended on a close relationship with a stockholder which could provide the specialised tuning components required.

The business had built a reputation over several years and was becoming an important name on the custom car scene, which is itself growing in popularity across Northern Ireland. When the stockholder announced their intention to cease trading it meant a crisis for the fitting company - but they were able to offer a lifeline.

The stockholder had an inventory worth over £400,000. They were prepared to offer this stock - enough to allow the fitter to continue in business for 18 months or more - for just £100,000.

It was a once in a lifetime opportunity for the fitting company, allowing them to cut their supply costs and provide instant access to all the tuning parts they needed. But it would also mean raising £100,000 in cash at short notice.

Not only was it a very attractive opportunity for the fitter, it was one he could not afford to miss - because without that stock, he could not continue in business. There were no other suppliers carrying the items in Northern Ireland - or the Republic. 

The fitter approached his bank, but was told that as a small business, the sum was far in excess of anything that could be provided. Other lenders that he contacted directly, and brokers which he then called, told him a similar story - some adding that they were not prepared to lend to his business sector, which they saw as presenting a high risk.

However, he then saw that Rangewell might be able to help where others could not.

Looking to source funding when others have said no? Needing lenders to see the potential and not negatives? Contact Rangewell today and see how we can help you

We are based in the City of London, but we work with lenders across the whole of the UK lending market. We understand the views and the lending criteria of each one - more than 350 in total - and we know those who may be most receptive to virtually any kind of lending proposition. 

In this case, we understood the challenges our client faced, and were determined to find a solution. The motor trade has proved a problem in recent years and, as a sole trader with no equity, our client would not present an attractive solution for many lenders.

However, the circumstances behind the need for the loan could be seen as a positive. We knew that the value of the stock to be acquired should be sufficient to provide security for the loan itself.

Stock Funding is a specialised area, but the stock itself was high value and non-perishable, which can be attractive to lenders as it may be possible to realise the value of a loan by selling the stock if the borrower is unable to keep up repayments. 

Turning to Rangewell for help with funding

Lenders that provide Stock Finance may specialise in certain business sectors - and may not have the expertise to offer solutions for all areas of business or types of stock. However, we knew that one of the leading lenders who may provide Stock Finance have operations in Northern Ireland, and approached one of our contacts to discuss the possibilities.

They were prepared to consider the motor trade, and to look at the proposition in detail.

We helped our client prepare a business case for the funding, showing how it could boost his business, increasing his profitability, and so making the loan very affordable.  

We were able to secure all the funds he needed - £100,000 - at a rate of 2% per month.

At Rangewell we can help arrange all types of business funding - including Stock Finance arrangements. So if you face any kind of business funding challenge, call us - we can help you find the answers.