Case Study: Plant Hire Equipment for Start-up Business

The Challenge

To arrange Asset finance for a Micro Plant equipment for a plant hire operation in Swansea during Covid-19 for a new start business with limited trading history with two young Directors. The Directors had a limited equity in the business and from a cashflow aspect the business was consistently operating within its small overdraft. The only tangible security available was through a cross company guarantee with a property business that had a buy to let property with circa 10% equity in. The Directors at this stage had very limited experience of using finance and the benefit it could have in managing cashflow through utilising VAT deferral payments.

Honey established a rapport with the clients through cold calling and taking a consultative approach when meeting the Directors to understand their business and their need for tailored plant and machinery finance to support the company's start-up phase.

Our Solution

As a business Honey assessed all aspects of the security along with understanding the specific micro plant equipment the business was seeking to purchase through engaging with the supplier as well as researching the broader micro plant hire sector to build up a knowledge to be able to factor in the final cashflow document and credit proposal. Having developed a proposal, a cashflow forecast based on a Sales plan for the business was built which Honey undertook a sensitivity analysis on before engaging with the Directors to reassess the exact equipment the business was to purchase based on the utilisation rates forecasted and the margins which could be attained.

Once the final decision on the equipment had been determined, a full credit proposal was submitted to a specific funder whom Honey had engaged with prior to it being submitted to understand their appetite and exactly what the funder would require to be able to come back with a credit sanction which would be supportive for the Directors. Honey built an extensive pack of supporting documents which were submitted to the lender, forming a strong case for plant and machinery finance approval.

The Result

Honey successfully secured the funding for the clients with the funder agreeing to facilitate further capital purchase moving forwards. The funder worked with the Directors around the additional security requirements to ensure that these tied in the Directors' future requirements. Additionally, through engaging with the supply chain, Honey established a relationship which provided additional value to the client moving forwards in the form of additional rebates.