In the past few months, we’ve talked a lot about “recovery”: what it means for New Zealand businesses, what hurdles are getting in the way, and how Merx can help business owners move forward.
To us, it seems the actual economic environment for most business owners continues to be largely unchanged. Trading outside of lockdown conditions appears fairly stable. A major handbrake has been mainstream lending criteria changes and uncertainty around this. For many small businesses or property investors, it’s not just a matter of ‘if’ they can get a loan, but also ‘when’ and how long it will take to get a response. Unfortunately, not all business owners can afford to wait. Some are well aware that ‘opportunity only knocks once’.
If you have clients looking for faster turnaround to get their projects underway, our team at Merx are here to help. As the following two case scenarios show, we think long-term but act quickly.
Fast turnaround
Client Scenario: This client needed finance to fund the refurbishment of two properties in their existing portfolio, a commercial property and a rented residential property, respectively. Notwithstanding there was solid cashflow being generated by these two assets, the bank seemed reluctant to lend them the extra money they required to move their projects forward. Caught in unexpected red tape and uncertainty of funding support, the client was looking for a faster solution and approached us to go ahead.
Merx Solution: Time was of the essence for this client, and while their bank hadn’t declined the loan, the approval process was taking longer than anticipated. With their information at hand, we were able to confirm that the client was in good standing, with current level of debt sitting low at just 20 per cent LVR. Within a few days, we granted the $200k loan they required, secured by second mortgages over their properties – just the speedy resolution that they were hoping for.
Working Capital
Client Scenario: This client, a project management firm, gets paid at the completion of the projects they work on. While their cashflow has always been lumpy by nature, multiple lockdowns have seen some projects delayed, which has further impacted the client’s revenue. This has also impacted their ability to raise funds through mainstream lenders. So they contacted us for a small working capital facility that could help them meet their short-term needs.
Merx Solution: At Merx, we’re used to working with clients with lumpy cashflow and financial circumstances that fall outside of the mainstream lenders’ ‘boxes’. By taking a longer view of this client’s capacity for project completion, we determined that the slowdown in revenue was likely to be temporary. Based on that, we provided them with a six-month working capital loan of $50,000, secured by a second mortgage over the business owner’s property. To allow their cashflow to catch up, we’re also deferring their repayments for three months, with interest capitalised to the loan.