Reparo Finance Completed Deal: £100k Working Capital When the Bank Said No

Deal Type: Settlement of a previous loan and working capital

Loan Amount: £100,000

Loan Type: Reparo 12-month loan with interest-only repayments

Security: Property

Region: South East

Reparo stepped in to help a family business when the banks were unwilling to help.

The long-standing business in the South East, which dated back to the 1800s, had a strong portfolio of security and solid financial information. However, there were short-term cash flow pressures, including a CCJ payment to clear.

Circumstances meant the business didn’t fit into the lending criteria of its normal bank lender – leaving the business with a working capital problem.

There were a few reasons that probably factored into the bank’s unwillingness to help:

  • A recent CCJ against the company.
  • Security was a property which was being used as a funeral home and mortuary, not typical security.

The business had an outstanding £50,000 loan with the bank, secured against a property. It planned to use a fresh loan to repay the bank, subsequently removing the bank’s fixed charge over the property. This property would be used as security against the larger £100,000 loan.

Reparo took the time to understand the specific circumstances and was able to proceed based on the following:

  • The adverse information was noted but didn’t derail the deal; Reparo always contextualise adverse financial information and often, as was the case here, the CCJ doesn’t necessarily make the deal high risk.
  • Although the underlying asset is atypical, Reparo are comfortable to get a valuation based on a 180-day sale. In this case, the asset was a viable purchase for a developer, and a value was determined based on the sale price to a business or individual looking to redevelop the site.

Sharon Bryden, director at Reparo Finance, explains how the deal passed the criteria:

“The deal was relatively simple in the end; the main issue for us was the value of the security. Because the security was slightly unusual, we had to determine its value. This work was all completed under time pressure because the business needed cash quickly to avoid cash flow problems.

We used our trusted partners to value the property quickly and were able to secure a 70% LTV based on a 180-day sale, supported by personal guarantees from two directors.

Once we had taken a look at the CCJ and verified the value of the property, we were able to close the deal very quickly. This was in spite of extra challenges posed by the bank regarding the redemption value of its loan.

The team worked quickly to get information from the bank and process the documentation – in the end, the lending went ahead, and the business was able to address its working capital challenges.” To discuss a business loan between £10,000 and £1m, please get in touch with one of the team on sales@reparofinance.co.uk or 0161 451 5710.