Last year BusinessLoans.ie assisted with an asset finance deal for an Irish manufacturing company that was forward planning for Brexit. They are in the glass industry and their supplier for jumbo sheets of tempered glass was UK based. While the current situation meant they felt they were paying more than they should, the situation was manageable. However, they had identified that the pain of Brexit moved this machinery purchase from a want to a need.
The Issues
The specialist manufacturer was in China and the business had already made one stage payment of €200,000 for the machine out of working capital. They needed finance fast because another stage payment was falling due and their bank were not on board. If they made the next payment out of working capital it would have hurt their business. The risk was too much for their own bank to construct an asset finance deal with a Chinese specialist manufacturer when the asset was not yet in Ireland and hence no collateral they could rely on. Also, this company knew what it wanted and their machine was bespoke. It was being constructed to their specification with European parts. Any asset finance underwriting team has to consider, if they are left on the hook for this in the event the deal goes sour, how can they quantify the resale value & find a buyer? It seemed the pillar banks didn’t have the specialist asset finance teams able to find a solution while the business was already committed to this project.
The Solution
BusinessLoans.ie reached out to one of the best alternative asset finance lenders in Ireland to get feedback on a solution. They too felt a big level of risk in making stage payments on an expensive and unusual asset coming from China however, when they dug a little deeper they found that the business had significant assets already on their balance sheet & located in Ireland. They laid out a plan to use those assets as collateral to finance the stage payments. The business owner was confident in his relationship with the manufacturer and was comfortable with the level of risk in making the stage payments. Eventually the machine was finished, shipped and got to port in Ireland. Then the asset finance company was able to switch the collateral to the new machine at port and away from the machines the business already owned. The business had their machine and only had to worry about making their monthly payments going forward.
If you’re in the market for machinery, vehicles, equipment or any capital expenditure talk to us. There are currently some excellent solutions available to Irish businesses. You can benefit from low SBCI rates from the Credit Guarantee Scheme and get what you need to trade stronger through Brexit, the pandemic and whatever else 2021 beholds for the Irish economy. Call the BusinessLoans.ie team today on 01 55 636 55.