EQUITY WITHDRAWAL

Client Scenario: This client, an existing business owner and investor, was looking at expanding into a new field by purchasing a business in the health and fitness industry, a gym. The acquisition was complementary to their existing business, although not directly related to it. The client needed additional funds to complete the purchase, but traditional lenders were reluctant to provide the required amount due to reliance on projected cash flow and Covid-19-related risks for the high-contact nature of the business.

Merx Solution: Due to the current uncertainty around cashflow, sectors that are most likely to be impacted by increased Alert levels may find it challenging to secure funding through the banks.

While we take those risks into account, we also like to take a broader view when assessing projected budgets. In this case, we looked at what the business owner had achieved before, and whether their assumptions were reasonable. Following a positive assessment, we granted a $470k loan with security over the new business plus second mortgages over their commercial property and residential property, to be repaid in 12 months.

WORKING CAPITAL

Client Scenario: This client, active in the hospitality industry, was looking for a working capital facility to support their business growth. Again, due to Covid-19 and the perceived risk around the sector, the banks were reluctant to provide the required funds based on projected cash flow alone.

Merx Solution: Just like the fitness sector, the hospitality industry has been one of the most affected by Covid-19 alert levels, with subsequent uncertainty around cash flow forecasts. In this client’s case, a comprehensive view of their business plans helped us ascertain the quality of their vision and the opportunity for multiple income streams. We therefore provided them with a working capital facility of $150k to underpin their business growth strategy, backed by a second mortgage over their property.