We were approached by one of our registered introducers who had received an enquiry from one of his contacts that provides interim FD services to companies of all shapes and sizes. The company in this case was an e-commerce business which specialises in foldable electric pedal bikes. The business had seen unprecedented demand for its products during the various lockdowns during the pandemic; however, it also faced significant problems sourcing enough stock to fulfil demand, considering most of it was sourced from China.
The business decided to take on a £400k confidential discounting facility to help raise cash against invoices from the b2b side of the business, accounting for around 70% of company revenue. At the same time, they took on a £500k trade finance line to assist with the bulk buying of stock in order to fulfil the huge demand for their products whilst working around global supply chain issues. Both facilities were provided by HSBC Bank, which requested a £400k Personal Guarantee. Having never signed a PG in support of a credit line and with the business still in its first two years of trading, the Directors were nervous to proceed without insurance cover in place.
We worked closely with the FD for the company, alongside our insurer, to understand the reasoning behind the current balance sheet deficiency and to recognise the huge potential for the business. We were able to approve terms for the Directors within five working days of receiving the application, with cover available to purchase instantly. The Directors proceeded ten days later once the facilities with HSBC had been finalised, grateful to have secured the peace of mind needed to help them focus on growing their business.
Interesting facts about the case
Growth can be just as much of a challenge as recession without adequate working capital support- finance solutions can often require PG support from the Directors, putting their personal assets at risk in the event of default, so it is wise to seek out protections against the unexpected.
Thanks to our case-by-case underwriting approach we are able to offer cover to new start-ups providing the Directors can demonstrate industry relevant experience as well as a credible business plan.
Generally speaking our standard cover cap for businesses trading less than 2 years is £200k, however, we were able to work with our insurer to understand the merits of the case and offer the full £400k required.
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