Our client, an experienced property investor and developer, set up a construction company and had been instructed to manage the construction of three dwellings.
Because the construction company was newly established, the development finance provider for the construction company’s client, required assurance that sufficient working capital was in place to deliver the project.
Our business finance advisory team prepared a working capital statement and business cashflow forecast for our client. We also provided the lender with a statement outlining our client’s construction experience, the trade suppliers available to the client and outlined the finance facilities obtainable to the client in order to manage the cashflow required to pay sub-contractors when on site.
Of those facilities, we put in place a Revolving Credit Facility of £20,000 that would allow the construction company to keep up with onsite costs, should cashflow become tight during the build. This flexible facility acts in a similar way to an overdraft with the client only paying for what they use.
The development lender was satisfied that the Revolving Credit Facility provided sufficient working capital and the client won the project and delivered on the build. The construction company has retained the facility for future projects.