Approaching us via our website, our new client ran a large transport business that had experienced a difficult time trading over the last two years.
They had worked hard to deal with the changing market, brought greater cost controls into their business and dealt with legacy debts only to be hit by the current fuel crisis just as they had begun to turn things around.
Having dealt with the previous issues, they were seeking an overdraft or a line of credit to support operations through the current period.
The main driver in particular was to have the cash flow support to pay suppliers in a timely manner.
There is an excellent non bank overdraft provider with an application process that doesn’t require financials for limits up to $1M.
Assessment relies on a read only view of business bank account statements with the lender assessing turnover through the bank accounts and gauging the average cash balance to determine liquidity.
The lender’s assessment seeks to ensure there is consistent turnover and a historical balance sufficient to meet repayments when they fall due.
Importantly they’re also looking at the ratio of the business’ cash balance to its turnover.
The reasoning for this is that a business with an average cash balance less than or around 10% of its gross monthly turnover is approaching distress.
This business was above but nearing this metric which meant the lender required security for at least six months to have confidence in the business enough to provide an approval.
Unlike others, this lender has a consistent track record of releasing security over property when a business’ position improves to their normal approval standard for an unsecured overdraft.
Having equity across both owner occupier and investment property, the business owner was happy to move forward with this solution given the excellent rate and very low fees.
The overdraft was set up with no establishment fees no line fees and no monthly fees making it a very cost-effective solution with an interest rate similar to bank rates.
The business owner was rapped with the outcome and very appreciative that we could turn around this kind of solution in less than two weeks.
Reach out if you could use working capital and cash flow support for your business or want to talk through your options.
