A legal practice approached us as one of the partners had fallen ill and they wanted to buy his share of the company back to ensure a path of succession and to give the partner some cash which would allow him to retire.
Having been established for over 20 years the practice approached their bank with confidence that their loan request would be approved without much issue. Their bank saw things a little differently. Their take was that the practice would be increasing it’s borrowing without any change to profitability, indeed their was concern that with the established partner leaving then business could decline.
The issues the bank raised where, to be fair, all fairly valid. However, the practice still had the same issue to overcome. The need to buy out the retiring partner was almost a fait accompli, it was simply about how it was achieved.
An offer of finance was made by a different bank, the condition was that the other partners use their own properties to secure the loan. The issue here was that not all partners had the same level of assets, which meant some would be risking more than others which created some unease.
One thing we love at Lime Consultancy is Crowdfunding. In this case it offered a great solution. The legal practice was profitable and trading well so we had affordability. Because Crowdfunding loans are spread among 1,000s of different lenders then the risk to any one lender is very small, this means that separate security is not required.
Our experience with Crowdfunding meant that we could offer this as a solution, something that until then the client had never known existed.
We obtained an approved offer of finance within 48 hours and had loan forms emailed to the client inside 7 days. A loan of £180,000 over 5 years was in the clients account inside 10 days.