Background

This startup provides male grooming services and products in high traffic shopping malls.

The founder was keen to ride the growing wave of demand for convenient, high-quality barbering services and establish a loyal client base in new areas before the competition. .

Funding request

The founder wanted to consolidate several high-cost, short-term loans and get additional funding to buy stock and continue opening new kiosks.

He already had three short-term loans in place totalling £65k. The annual interest rates were around 37% and monthly repayments were over £6k.

How we helped them RISE

We initially reached out to Community Development Finance Institutions (CDFIs). Unfortunately, the small financial benefit of working with a CDFI quickly became heavily outweighed by the time it would take to provide all the required financial information.

As a faster alternative, we approached a different lender with which we have a long history of working. This relationship meant that when we faced a further setback - the request for £100k was rejected - we were able to get feedback: the underwriters wern't happy with affordability and the lack of homeownership. .

The Risecap team presented evidence that the loan was affordable by revisiting some nuances and calculated the new debt service cover. We also convinced the lender to reduce their fee. This opened up a loan offer of £75k, which would consolidate the existing high-cost loans, provide some immediate funds, and save over £4k on repayments every month.

Next, we worked with the client to assess whether this alternative would meet their business needs, and found that it would.

The final loan amount was for £75k at 17.4% over 60 months, with monthly repayments around £2k.

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