A specialist construction group recently approached Enness with the ambition of upscaling their operations significantly.
The business had the opportunity to take on new additional, higher-value contracts and diversify their client base.
Here at Enness, we take the time to understand our clients holistically and identified that the business was already operating at maximum capacity concerning their vehicle fleet and advised that in order to achieve their targeted growth trajectory, they would be required to increase their fleet of vehicles and obtain a new working capital facility as the new contracts were secured. This would require the acquisition of both traditional vehicles, such as vans and trucks, and more specialised niche vehicles, necessitating a bespoke financing package designed to accommodate each asset class.
Recognising the client's specific needs, Enness secured for the client a tailored facility structured to scale to their operational requirement, in line with the acquisition of new contracts, arranging a pre-approved credit facility of £800,000 in order to support the purchase of new assets, with each individual asset secured on a hire purchase agreement. The first £400,000 was set aside for traditional vehicles, secured on a 5-year term, with a flat interest rate. The second £400,000 was to be used for the acquisition of a specialist vehicle, again on a hire purchase agreement and with a 5-year term, but with a unique interest rate set for each respective asset.
Some of the benefits of this structure were as follows:
- The pre-approved line of credit enabled the business to act swiftly on purchasing opportunities, reducing delays and ensuring they were well-positioned to promptly meet project demands.
- Funding niche and specialised machinery, the company could take on diverse projects, expand their capabilities, and cater to a broader client base, further boosting their order book.
- The business could strategically allocate funds within the credit line to purchase assets based on their immediate needs.
This structure allows the business to organically grow its order book and purchase contract-specific assets at the right point in their trading cycle without worrying about obtaining finance post-signing of new contracts. The business now has a means of growing revenue and profitability quickly whilst preserving its cash flow, spreading the cost of asset acquisition over time, and saving their capital for investment in other required areas.
Enness were able to leverage our market expertise and holistic approach to lending in order to assist this client in achieving their short and long-term goals. The construction company is now well-positioned to upscale its fleet and machinery and expand its operational capacity in line with its order book. The pre-approved line of credit offers flexibility, efficiency, and financial agility, allowing the client to meet project demands promptly and take advantage of various opportunities in the dynamic construction industry. Their collaboration with Enness has empowered this business to achieve its expansion goals by utilising a bespoke and truly useful facility.
If your business is looking to expand its operation, please feel free to get in touch to discuss your specific circumstances.
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