Business Finance Blog

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Trade Finance for a New Venture

 

    As Business Finance Consultants we experience, on a daily basis, the trials and tribulations that small businesses go through trying to raise finance. For start-up enterprises it is particularly difficult but even for small businesses that have been established for a while it can present problems.

    A typical example is a client who approached us recently for help in finding funding to allow them to import raw materials from a new source. The company supplies leather for the UK shoe and bag manufacturing industry. The problem was that, whilst the quality and price of the new supplies were very acceptable, the Supplier would only ship by the Container load. Cost wise this put it beyond the immediate capabilities of this young business.

    Our client approached their bank for help but they were unable to help. The reason? – Our client did not have firm orders to cover more than a fraction of the product to be imported. Also the Directors were unable to offer any other assets to provide the Bank with alternative security.

    We took a close look at the company, and its owner. Having started from scratch just over a year ago the business had started to gain a reputation for quality and reliability with a number of major UK manufacturers. Both of these qualities are essential for suppliers to the shoe & bag trade which relies on continued & volume production. Added to this was the fact that the Owner, who had many years of experience in the business with other companies, knows exactly where he wants to go with the business and, more importantly, how to get there.

    Despite this it was obvious that, because of the lack of guaranteed forward orders, none of the other traditional lenders (banks) would consider funding this project. Luckily at Business Finance Services (BFS) we know a lot of specialist (niche) Lenders. This includes at least one who specialises in financing one-off or short term Trade Finance deals. We introduced this Lender to our client and, after some brief negotiations and due diligence a deal was struck which allowed our client to cover the costs of importing two container loads of leather. The first of these is already in the UK and, at the time of writing this blog, the second is en-route.

    The result is a happy client who has his supplies. He also knows that he can rely on BFS to source finance for him when needed, thereby leaving him with more time to get on with growing his business. For details on what we can do for you check out our web site at www.bufinserv.co.uk or contact us at enquiries@bufinserv.co.uk or simply call us on 01327 349779 . We look forward to hearing from you.