CASE STUDIES

Case Studies
Overdraft 
Funding
Electronics Company T/O £3-4m, profitable and traditionally cash rich
Hired large team from a competitor
Projections showed possible need for funding while team bedded in
Required £500K in case of need facility for 12 months
Incumbent bank only interested in utilising directors' personal property as security 
I.F. facility not suitable due to project/stage payments
P2P overdraft facility arranged for £500K
Initial 12 month term - can be drawn on and repaid as cashflow dictates. 
3-4 weeks to set up
Security: First Debenture, No PGs required in this instance
Costs: Interest rate 9.0%, charged only when used; 0.4% usage fee (only in months that facility is used); Set up fee 4.0%
Four months in, company had not drawn on the facility, but had the comfort of knowing it was there if required

Development Finance
Established small developer wanted to buy site within existing housing estate and build nine new homes
Banks not interested - deemed 'speculative'
Funding arranged to buy the site and build out 
£750K overall facility. 70% LTV site purchase; 70% funding of WIP - drawn in tranches
Monitored via QS reports and Ludgate site visits
Costs: Interest rate 14%; Set up fee 5.0%. No exit fees
50% repayment from each plot sale 
Site fully sold before completion and facility fully repaid ahead of time
Subsequent loan arranged to develop 2-unit infill site. Completed and repaid
Presently arranging £1.4m facility to buy and develop 19-unit site

MBI
Funding
HVAC contractor, T/O £11m, EDITDA £750K
Retirement sale. Experienced buyer, but only small personal cash input. Total purchase price £2.4m.
Funded by £1.2m 5-year cashflow loan. Balance funded by vendor loan notes
Loan split £650K fully amortising; £650K interest only. I/O portion to be funded by planned sale of non-core division within 2 years
Security: First debenture; unsupported PG
Cost: Interest rate 12%; Setup fee 4.0%. No early repayment fees

MBO
Funding
Buy-Out by incumbent MD of yacht manufacturer. Simultaneous acquisition of the assets of a competitor
Accounts had been 'written for tax'; Ludgate engaged specialist FD to reconstitute to show true underlying profitability
Projections showed strong EBITDA going forward due to planned operational changes and sales increases
Purchase funded by MD contribution, vendor loan and a debt facility of £620K, fully amortising over 5 years
Security: First debenture, unsupported PGs
Cost: Interest rate 10.5%, Set up fee 6.0%. No early repayment fees

Acquisition
Finance
IFA practice driving 'buy & build' strategy to acquire and integrate other practices
Nine acquisitions to date funded by P2P loans
Security: First debenture to capture trail income, plus unsupported PGs
Current proposal to refinance to another P2P lender for £1.5m with further acquisition funding to follow

Client Résumé :

Coopers Carpentry
Contractors Limited
Based in Pelsall, West Midlands, Coopers Carpentry undertakes carpentry and joinery contracts for major construction firms such as Bouygues Thomas Vale, Wimpey and Keir. It has a good history, being established in 1988 by the MD, Paul Cooper, and has worked on prestigious and large projects during that time.

Coopers was introduced to Ludgate by their accountant at the end of 2013 when its bankers were beginning to apply pressure for repayment of its borrowing. This was driven by internal bank policy towards the construction sector, which had suffered heavily during the recession.

Steve Grice of Ludgate Finance, working with Paul and the accountant, took the time to understand the business and the local market and could see that the business stood on the brink of a number of opportunities. Whilst the future looked bright, growth was being constrained.

"I could see there was a good business here, with a good management, but it was struggling with the constraints of its existing funding structure" said Steve. "It was clear that for the business to grow it needed both working capital and to move away from traditional funding".

After doing due diligence Ludgate arranged a peer-to-peer loan through ThinCats which allowed the business to repay the bank and gave the extra working capital to take on new contracts and grow the business.

"The new loan allowed me to get on with the task of running the business rather than having to juggle cashflow or worry about the bank" said Paul, "Although Ludgate monitored the businesses regularly to make sure everything was OK, their approach was very much that of the old-fashioned bank manager that used to be here to help".

Throughout the period of the loan, Coopers made all repayments in full and on time and the business has thrived to the point where they have recently refinanced back to a (different) mainstream bank, repaying the peer-to-peer loan in full.

Paul said, "I'm very grateful for the help that Ludgate gave throughout the process. Steve has helped us to expand and take the business to the next level".

Steve said, "This really shows the power of peer-to-peer lending; it's a real alternative to more traditional funding lines, but is often the first step in a longer funding process."

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