We were introduced to an Indian Restaurant and Take Away by their accountant. The client had approached their accountant as the bank had turned down the restaurant’s loan application, citing restaurant finance as an area they had no interest in.
They had also had problems with the business’ financial accounts, given not everything was going through the books, some staff paid cash etc (yes, it does happen!), hence restaurant finance was proving difficult.
Operating a 60 cover restaurant and take away, the business needed to clear HMRC arrears and replace some kitchen equipment.
The underlying business was fairly sound, albeit the financial accounts did not reflect this. In addition the owners had no personal assets to support any new borrowing, as well as having already approached their bankers before we could have any input into the proposal.
The simple answer is not as many as we would like. That said, clearing HMRC was a priority and the cost of not replacing kitchen equipment would have been greater than not doing it. In this sense, the objectives were about getting finance in place, rather than the terms or cost of it, although everything has to be reasonable.
We always ask the client what their objectives are, what they are willing to move on, and what is absolutely essential.
- Raise £40k to clear HMRC and replace kitchen equipment
- Raise £28k to clear HMRC
In this case there wasn’t a third option as the aims of the project were very simple.
Using an industry specific lender who had an appetite for restaurant finance we matched the client needs, with the variable we had on offer, and obtained £40k of finance over a two year period.
This finance was arranged without any Financial Accounts being provided, and without the need for the owner to provide separate security.
There are options in the market, not available independently, that can surprise many business owners. The finance we arranged here was not the cheapest, but it allowed the business to repay HMRC and refit their kitchen, we also agreed a full repayment option after twelve months, meaning that if trading improved as expected then we could refinance onto a cheaper option at that time.
In this case it was about leveraging what we had, meeting the immediate need, and putting in place an option for when the present issues had been resolved,
If you want to know more about how we arranged this finance and how it works then please get in touch on 01293 541333, via the website, or by adding your comments to the blog.