Our client, a labor-hire company serving the mining sector, was routinely utilizing nearly $1 million to maintain cash flow until their invoices were paid. This self-funding approach reached its limit, preventing them from pursuing additional business opportunities.
Recognizing the need for a $1 million facility with the potential to expand to $2 million, we helped the client secure a letter of offer for a competitively priced debtor finance facility. Despite home loan rates being below 2% and debtor finance rates starting at 5.5%, their accountant suggested initially borrowing against their home and later seeking the finance facility once home equity was exhausted.
This advice proved impractical for the client. Firstly, they were reluctant to use their family home as collateral for business finance. Secondly, they had only $300,000 of available home equity, which was insufficient for their needs. Since the debtor finance facility could immediately provide the necessary credit and scale with their business growth, they decided to keep their family home out of the equation and opted for the debtor finance solution.
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