At Hermes Capital, we help businesses that are facing challenging scenarios to achieve winning outcomes. Challenging scenarios include business turnaround, start-up, business acquisition, formal restructuring, or, as demonstrated in this month’s case study below – rapid growth.
The capital Hermes provides comes with the right structure, in the right quantity and at the right time to give our clients the decisive fire power they need to achieve their goals. We provide funds ranging from $500,000 to $10 million, and our debtor finance clients have the unique capacity to provide adjunct term loans secured by equipment and or property.
This month’s case study demonstrates how Hermes fills the gap left by the banks and other institutions in the SME market for commercial finance.
An engineering firm that provides services to the rail infrastructure sector needed to buy a new piece of equipment in order to make the most of expansion opportunities that would – if seized – transform the business.
The business was turning over $400,000 per month, and the new piece of equipment would provide not only a new revenue stream of roughly an additional $100,000 per month, but would also help win additional customers for the existing fleet.
The company was less than two years old, and as a fledgling business its financials were at best irregular.
And, like many growing businesses, working capital challenges had lead to the inevitable ATO tax arrangement.
Asset Based Lending Solution
The broker approached Hermes – ostensibly at first to fund the equipment purchase.
However, given the ATO scenario in addition to the planned growth, it was clear that a working capital solution was also required.
This is where Hermes provided its “Capital Maximiser” solution: through the combination of a $500,000 debtor finance facility with a $500,000 equipment loan.
This not only funded the necessary equipment acquisition, but simultaneously backed fund growth going forward. As such, the pressure of the relationship between the firm and the ATO was alleviated.
The gap in the market for commerical finance
The broker had been unable to find an equipment financier that provided an approval for the level of funding required.
The equipment was not “orphan” as such, but at a cost price of $500,000 was sufficiently unique to be deemed unsuitable security for a business with ATO arrears and a trading history of less than two years. Here, the Hermes capital solution was truly unique in the market.
Through a tailored capital solution for equipment in concert with a debtor finance/working capital facility, the business was able to finance the equipment they had initially set out to acquire.
The firm has successfully deployed it to achieve a quantum leap in growth with a considerably improved cash-flow as an added bonus.