COMMERCIAL BUILDER - 'AC' LTD
A construction business turning over about £3m with a history of rapid growth. With sales in one of their key markets failing to materialise at expected levels, cash flow pressures started to creep upwards. In parallel,the overdraft facility was right up against and sometimes exceededits limit.But there was no further asset security to support additional borrowing.
Building on the management accounts and mapping the figures into a special 2-page cash flow format, it became aparent that the company's break-even needed to be brought down.Even with these refinements, the model indicated that the company needed £200k; £100k of it urgently.
In consultation with the comapny's Bank Relationship Manager, the decision was taken to pursue funding through the DTI Small Firms Loan Guarantee Scheme.
Working closely with the Bank Relationship Manager, various cash flow sensitivities were prepared and discussed at length to ensure the strongest possible case could be put forward for 'Region' to sanction.
A week after the final cash flows were submitted, final approval came through.
What does this case demonstrate?
Even where there is no further asset securityavailable to support additional borrowing and current cash flow is tight, there is often still scope to get the funds you need.
Is this going to be tougher to achieve in the midst of the credit crunch? Yes. Impossible - not necessarily.
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