Hermes Capital specialises in providing asset-based funding to SMEs and mid-market companies in “special situations”. “Special situations” are those where normal credit criteria doesn’t apply.
Hermes is an investment fund – not a bank, and so has the flexibility to structure the right deal, for the right amount, and at the right time. This allows your clients the decisive fire power they need to achieve their goals.
As long as the situation Hermes is being asked to fund is sufficiently asset-backed, Hermes is able to focus on the future potential of the business rather than its historical performance to assess borrowing capacity, as this case study demonstrates.
A “Special” Transitional Case
A materials handling equipment hire client needed capital for fleet expansion. There had been a bumpy transition from father to son, including cost blow-outs on a move to new premises that put a hole in the clients cashflow – and a hole in its ATO Portal.
The client had three specific funding requirements:
- An immediate need for funding for the fleet expansion
- To meet the working capital requirements that would come with the expansion
- To facilitate an ATO payment plan to address the arrears and to make the business bankable once again.
The gap in the market for commercial finance
In this scenario, the ATO arrears of the business had ruled out traditional sources of equipment finance.
However, the client had a debtor’s ledger that was manageable, with equity in its existing fleet and equity in personal property. This allowed Hermes to take on a unique solution for the client.
Asset-Based Lending Solution
The broker identified that the deal was a “special situation” and that given the asset coverage available to support funding, as well as a positive outlook for the relocated and expanding business, the situation was ideal for Hermes.
Hermes assessed that the level of funding it could make available would be sufficient to meet the client’s needs – importantly, its working capital and liquidity.
Hermes’ facility included a term loan for $400,000 that addressed the equipment purchase, along with a $600,000 debtor finance facility addressing the ATO arrears and on-going liquidity.
The client now has the additional assets in the field generating further revenue. ATO obligations have been met and are ahead of forecasts to repay the debt.
Fundamentally there was a strong business with a good database of clients. Due to unforeseen circumstances, the client was struggling to take advantage of an opportunity that had arisen. Moving forward, the client is looking to continue their expansion and transitioning back into a bank.