CLIENT SCENARIO #1
Why did this client need our funding: The client negotiated the purchase of a complementary business that would add scale and profit to their existing professional services business. They didn’t have any property security, making it unlikely to raise money from a main bank in the business banking space. While their trading history supported their ability to repay debt over time, they were unable to get approval from their bank without property security in place.
Amount: $350,000
Industry: Professional services
Location: Auckland
Debt/EBIT ratio: 1x
Type of security: General security over the business, specific security over the accounts receivable.
Path to repayment: The additional cash flow from purchasing this business should enable them to repay all of the debt we provided over time.
Why Merx: We provided funding that was fit for purpose, which was to make an acquisition to grow their business. We structured repayments over a sensible time period, aligned with their expected trading and the stable cash flow generated from the business.
CLIENT SCENARIO #2
Why did this client need our funding: A property developer undertaking a commercial/industrial project, needed funding to meet cost overruns associated with their project. Despite having other properties in their broader portfolio, their existing funder didn’t want to provide additional funding to support the project’s completion. Sometimes project funders can be myopic and stubborn, unwilling to offer additional funding needed to complete a project.
Amount: $150,000
Industry: Property development
Location: Bay of Plenty
LVR: 50%
Type of security: First mortgage over an apartment in Auckland.
Path to repayment: Completion of property development and refinancing locally, or sale of the developed property once finished. Alternatively, the sale of the apartment taken as security for this loan.
Why Merx: We recognised that the project needed a cash injection to reach completion. We were able to provide this client with a quick decision after assessing the likely value of their apartment, without needing to obtain registered valuations, and provided the funds they needed within one week.
CLIENT SCENARIO #3
Why did this client need our funding: In the current market, no one is providing funding for pre-development land. Most funders are taking a very conservative approach and are not willing to be exposed to land that is not immediately lined up for development. This client needed funding to meet some outstanding bills and tax debts on other projects. They had unencumbered land intended for future development, but no funders were willing to provide funding against that security.
Amount: $350,000
Industry: Property development
Location: Bay of Plenty
LVR: < 20%
Type of security: Land for future development.
Path to repayment: The client will pay us interest monthly from their broader group cash flow and will ultimately either refinance the land or pay us back from the sale of other property development projects.
Why Merx: We were able to provide approval within one week and settle quickly afterward. We took a pragmatic view, recognising that land still has value even in a tough market. The borrower had the capacity to pay interest on the land while working through the issues in their broader portfolio to refinance or repay us.