Case Study: Financing for Vehicle Fleet Expansion

The Challenge

The client, a rapidly growing company, had £20 million in existing funding facilities with banks but was seeking an additional £5 million to purchase a new batch of vehicles for leasing. Despite their current financial arrangements, they recognised that the terms offered by their banks may not be the most competitive. The need for enhanced vehicle fleet finance became urgent as upcoming contracts required immediate access to new vehicles. The challenge lay in finding a solution that would not only provide the necessary funding but also improve their overall financial terms.

Our Solution

After assessing the client's financing needs, we secured a £5 million credit line over 36 months, designed for flexibility and affordability. The vehicle fleet finance arrangement allowed for multiple drawdowns, enabling the client to access funds as required. By incorporating large balloon payments based on the anticipated future value of the vehicles, we effectively lowered monthly payment obligations. Additionally, we structured the deal with a minimal upfront deposit, introduced VAT deferral to enhance cash flow, and eliminated the requirement for personal guarantees, thereby reducing risk for the business owners significantly. The financing solution enabled the client to substantially expand their fleet, capitalising on significant discounts available for vehicle purchases.

This strategic decision became particularly profitable during the COVID-19 pandemic, as there were constraints in the vehicle supply market that drove up demand. Consequently, the client was able to sell these vehicles for considerable profit, thus bolstering their revenue generation in a challenging economic environment. This successful deployment of capital not only improved the financial standing of the business but also solidified its market position as a reliable leasing provider.

The Result

The client's reaction to our proposed vehicle fleet finance solution was overwhelmingly positive, as they appreciated the more favourable interest rate compared to their existing arrangements with banks. This not only instilled confidence in the viability of the financing strategy but also encouraged swift action.

Within six months of securing approval, they fully utilised the entire £5 million facility. Throughout the process, we maintained open lines of communication, enabling the client to address any evolving needs simultaneously and ensuring that financing remained readily available for ongoing operational demands and future vehicle acquisitions.