Client Scenario: This Auckland-based client had purchased land and was looking to fund the construction of a property. However, as a property investor, they couldn’t prove enough debt-servicing capacity from the rental of their existing properties to satisfy their first mortgage lenders requirements. So they looked to us to help get their project underway.
Merx Solution: At Merx, we pride ourselves on facilitating solutions to business circumstances that fall outside the boundaries of traditional banking. In this case, we considered the expected value of the property at completion, which – based on its positioning in a high-growth population area – should amount to around $1 million.
We are now funding up to 70% of that sum, equating to most of the costs required to steer the project to the finish line over the next nine months. We determined that by then they will have enough income, or assets to sell, to service, and repay the debt.
BUSINESS WORKING CAPITAL
Client Scenario: A couple of months ago, this client seized an opportunity to buy a construction supply business, making the transition from being employed into self-employment. In purchasing the business they remortgaged their house to another bank, but in the lead-up to a busy season, they didn’t have enough business working capital to run their new venture efficiently.
The bank was reluctant to provide the additional funding that was needed because, as new clients, they didn’t have the track record or the historic financial data to support the funding within the bank’s parametres. So they reached out to us for secondary funding.
Merx Solution: When it comes to assessing the feasibility of a project, there’s more to a business than just cold numbers and historic data. We believe its future prospects are just as important, including the likelihood of achieving set targets.
In this client scenario, we identified that the client had a good plan and the ability to carry it out. So we provided them with a $50,000 loan to be repaid within six months. Secured with a GSA over their business and a second mortgage over their property, this working capital facility will help them support their peak busy season, and hopefully create positive momentum for growth.