BUSINESS GROWTH AND PERFORMANCE – CLIENT FUNDING SCENARIOS
A SHORT TERM BRIDGE TO GROWTH
Client Scenario: This entrepreneurial client runs a fast growing advertising business. When we met, we were quickly impressed by his track record for building successful businesses and the growth forecast backed by sound planning. Before meeting with Merx, our client’s plans were hampered a classic example of ‘chicken and egg’: while there was an appetite by his main bank to provide the required funding, he would need to realise the growth first – not in full, but a few month’s progress to evidence that the forecast is valid.
Merx Solution: To solve our client’s ‘chicken and egg’ issue, Merx advanced just over $200,000 for two-months. Secured by a charge on his business and second mortgage on his property, the short-term funding is designed to enable our client to realise growth, and then secure longer-term funding with his main bank. Referred by a trusted accountant (appreciated), we were able to meet, assess and advance the required funding within 48 hours.
BACKING SUCCESS – SHORT-TERM BRIDGING FINANCE
Client Scenario: As we all know, technology moves at a rapid pace. And as our client – the owner of an impressive tech company – identified, in this industry it essential to seize smart opportunities quickly. A proven business with a solid track record of strong business performance, our client had short-term funding requirement to realise an expansion opportunity.
Merx Solution: A company with a bright future, backed by solid performance and astute planning, Merx provided a $300,000 bridge funding facility for two months. Secured by an unregistered second mortgage, the funding enabled our client to progress his expansion and deliver on planned growth. We thoroughly enjoyed working this client – a smart business with great leadership and a clear vision.
NEW BUSINESS ACQUISITION
Client Scenario: A savvy professional in his industry, our client was initially brought in to troubleshoot and turn a franchise business around. After doing an exceptional job in a short period of time, he was offered the opportunity to buy the business; an opportunity that would mean he could reap the rewards of his strategic approach and expertise. While he had made significant progress towards realising a healthy trading position, securing funds for the acquisition through his bank was proving difficult due to the lack of trading evidence to support the recent change in business performance. After working with the bank for a while, his business finance broker approached Merx.
Merx Solution: This is a prime example of how Merx can help a savvy operator with proven expertise secure a business opportunity when time is of the essence. We were impressed by what our client had achieved to date, and were comfortable with the business plan and projected trading position. Secured against residential property, we funded the acquisition of the franchise and the required working capital for three months.
BRIDGING FOR SHORT-TERM WORKING CAPITAL
Client Scenario: Timing is – as they say – everything, which this scenario highlights. A seasoned operator in office supplies, our client recently implemented a range of growth initiatives that would be funded by the sale of property. A good plan but with one key issue – the sale of the property would not be complete in time to meet the growth-related spike in working capital requirements – both operational and tax. At 80% LVR, our client’s main bank was unable to help, so their accountant suggested they speak to Merx.
Merx Solution: We understand the good and tricky outcomes of growth. Based on the client’s trading performance, Merx funded the $300,000 in short-term working capital required, secured against a second mortgage on the property up for sale. The facility is in place for three months, which allows the client the required time to realise the property sale. A great example of how Merx supports clients with purpose-fit short-term working capital.
WORKING CAPITAL FOR GROWTH
Client Scenario: Referred by a finance broker, this savvy tech company knows the importance of being operationally and financially prepared for growth opportunities, and plans accordingly. To prepare for forecast growth and the related working capital requirements, the company director was in the process of completing a property development project – the profits of which were earmarked to finance the tech company growth. However, the all too common Council hold-ups with finalising Code of Compliance and the like delayed the completion of the project, and as a result created a short-term gap in working capital funding.
Merx Solution: Saying that this client is a strong planner with a strategic approach to funding growth is an understatement – we were impressed by their plans and business finance acumen and were pleased to support the gap in working capital. Secured by a second mortgage against the property development project, we advanced $60,000 for a window of three-months; affording the client ample time to complete the property development and realise the planned profits.
GROWING WITHOUT DELAY: TRANSPORT SECTOR
Client Scenario: Our client, who operates multiple runs in the transport industry, rolled out a new growth plan earlier this year. A key factor underpinned our client’s plan: selling one of their runs to fund the purchase of new equipment required to grow into another opportunity. As anyone in business knows, timing plays an important role in the success of growth plans. Rather than delaying their entry into the opportunity and the associated equipment purchase, our client spoke to Merx about a short-term funding solution that would enable them to move forward while they negotiated the sale of their run.
Merx Solution: Secured by a second GSA over the business and a second mortgage over residential property, Merx funded $60,000 for six-months to enable our client to progress their growth plans and purchase new equipment. The funding also allowed our client to catch up on tax obligations. Once completed, the sale of the existing run will mean that our client can clear the Merx funding: a great example of how Merx can provide short-term funding to help clients move forward with their plans, without delay.
ACCELERATING GROWTH: TECHNOLOGY SECTOR
Client Objective: An established technology business with impressive and dependable plans, our client required funding to accelerate growth and realise existing opportunities.
Merx Solution: With 25% equity in property, our client had hit the maximum of their mainstream lender’s LVR criteria. We provided a bridge funding facility of $300,000 over a period of two months, secured by an unregistered second mortgage. Outcome: The short term finance provided by Merx enabled our client to move forward with growth plans, and they have since repaid the bridging finance. A great example of how Merx can ‘bridge the short-term gap’ between goals and success.
Client Objective: A start-up in the technology space, this client impressed us with their solid business plan for an established market need. While our client had equity, they were unable to prove consistent servicing, and therefore fell outside their bank’s lending criteria.
Merx Solution: Merx provided a six-month business loan secured by a second mortgage; the finance required for planned start-up resourcing and business operations. Outcome: It’s always rewarding to see a start-up on the way to success, which is most certainly the case here. Our client has put the funding provided by Merx to good use, and we look forward to celebrating the wins of this new business.
PROPERTY DEVELOPMENT CLIENT FUNDING SCENARIOS
EXPANDING PLANS: PROPERTY DEVELOPMENT
Client Scenario: Our client – a residential property developer – identified an opportunity to undertake a more comprehensive and profitable development by purchasing land adjacent to his existing property. However, with 65% LVR, he lacked the equity required by his main bank to secure the purchase.
Merx Solution: Land-only can be a volatile asset and so we spent some time with our client to understand the development, the timeframe and the forecast profit. With a sound plan and a location that comfortably fits our criteria (main population centres), we advanced $350,000 for a six-month term, secured by a second mortgage across both sites. The funding has enabled our client to get the development underway and has provided the necessary time to secure full project finance. Referred by a finance broker (thank you), we look forward to catching up with our client in the near future to see how we may be able to assist with the next stage in development funding.
REAPING THE REWARDS OF REFURBISHMENT
Client Scenario: Our client, a commercial property owner, identified that refurbishing one of his properties would deliver a higher yield as well as increasing the value of his asset. With a solid project plan and strong rationale based on area growth and demand, the refurbishment represented a sound investment.
Merx Solution: Unable to secure the funding required for the project through his main bank due to LVR levels, our client approached Merx and talked us through the project and forecast return. Secured by a second mortgage, we advanced the funds for a period of six months. This enabled our client to complete the refurbishment, revalue the property and then restructure his lending with his main bank. A great result for our client and an example of how Merx can bridge the gap with short term property finance.
RESIDENTIAL PROPERTY DEVELOPER – PRE-DEVELOPMENT FUNDING
Client Scenario: An established residential property developer, our client was getting ready to expand his portfolio with a new project. To get underway, he required funding for pre-development costs, such as design and resource consent etc.
Merx Solution: Using second mortgage security against two properties, we funded the $120,000 required for pre-development costs, which enabled our client to move forward with his new project.
PURPOSE-FIT: APPLYING THE COMMERCIAL LENS
Client Scenario: At Merx, we’re focused on the purpose of required funding. This client scenario illustrates this well. Our client owns an attractive lifestyle block, which is well situated and with obvious appeal for the holiday accommodation market. They had consents in place with the Council and wanted to fund the construction of pre-fabricated modular buildings on the site – purpose built for weekend and holiday stay accommodation. In essence, it is a start-up venture designed to add value to the property as well as generate revenue from accommodation bookings. However, our client’s main bank view prohibited the venture being assessed as a commercial endeavour, meaning residential lending criteria applied. And while security was not an issue, LVR and servicing were outside main bank requirements.
Merx Solution: When our client approached Merx, we could see the strong commercial nature of the venture, and approached the required funding as a property development project. On this basis, and relying on the projected value and cashflow on completion, we funded $350,000 for the first stage of development. This enabled our client to realise the increase in asset value and cashflow through accommodation bookings, which will be required to allow for refinance with their main bank.
FUNDING FOR THE FINISH LINE – COMMERCIAL PROPERTY
Client Scenario: Our client, a seasoned Commercial Property Developer, required funds to complete their latest property development project – a commercial and retail space of over 1000sq metres. While construction was finished, our client needed finance for the last-leg in the project, that being fit-out and holding costs such as marketing.
Merx Solution: At 60 per cent LVR, our client was short on equity required by their main bank and asked Merx whether we could provide a short-term funding solution. Using second mortgage security on the commercial and retail space, we advanced $500,000 for a period of six months. This has enabled our client to complete the fit-out and secure tenants. Once lease negotiations are complete, we expect that the new property valuation will comfortably support our client’s main bank LVR requirements, at which time the Merx facility will be repaid.
PARTNERING PROPERTY DEVELOPMENT SUCCESS
Client Objective: Our client is a Property Developer who tends to work with ‘many irons in the fire’ at any one time. An opportunity arose to acquire a new development site but, because his finances were fully committed, his bank couldn’t offer any more funding.
Merx Solution: We recognised our client had an immediate need for funding until some other projects were completed. We invested alongside him by advancing a short term loan so he could buy the land. Outcome: Our client was able to acquire the land with the funding provided. Upon completion of his other projects he was able to transfer funding back to the bank who were once again able to provide finance.
IMPORT AND WHOLESALE – CLIENT FUNDING SCENARIOS
SEIZING THE OPPORTUNITY: IMPORT AND WHOLESALE
Client Scenario: An importer and wholesaler of fashion accessories, our client was recently presented with an opportunity to achieve 40 per cent margin by sourcing additional product for an existing client. While her bank was keen to assist, they were unable to make the funding tick the boxes, and so referred to Merx for a short-term business working capital solution.
Merx Solution: A great business owner with a sound opportunity but limited liquidity, we were happy to help. Secured by a second mortgage, we advanced $50,000 for a period of two to three months, enabling our client to achieve a $35,000 margin and expand their service relationship with their client.
IMPORTER – SEASONAL WORKING CAPITAL
Client Scenario: An importer and wholesaler of sports equipment, our client’s annual turnover activity is focused between November and February. Leading up to the season, our client needed funding to get this year’s stock in country, ready for sale. However, as our client’s overdraft facility is spread across the year, it fell short of the concentrated working capital requirement.
Merx Solution: This is a great business with a proven track record. Secured against the assets of the business and based on projected cash-flow and performance, we provided a short-term loan for the $60,000 required to get this season underway.
SHORT-TERM FINANCE FOR STOCK REQUIREMENTS
Client Scenario: An importer and wholesaler with an obvious talent for winning strong sales contracts in the retail sector, our client needed short-term funding to fulfil an increase in orders from national retail brands. We relish opportunities to help clients secure new wins, particularly where they could lead to an ongoing increase in revenue for the business.
Merx Solution: As we have mentioned, we believe in fit-for-purpose funding (finance for a specific business outcome), and this is a great example of that. Based on the confirmed sales contracts, and secured against stock and a second mortgage, Merx funded the $50,000 required to purchase and import the stock – a win for the business that will likely result in an ongoing lift in sales.