Most businesses do not set out to end up with five loans. They take what is available when they need it, and a few years later the repayments have stacked up. This technology business was paying more than £24,000 a month across five lenders. Meanwhile £1.9m sat in invoices its customers had not paid yet, and under £50,000 sat in the bank. We have arranged its funding since the pandemic, and this round changed how the whole thing was built.

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Client snapshot

Industry: Technology

Size: Established SME

Years operating: More than a decade

Geography: United Kingdom, selling into the UK, Europe and the US

Description: A UK technology business building specialist hardware to order. Long customer payment terms meant most of the money it had earned was tied up in unpaid invoices rather than sitting in the bank.

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The growth journey

- Started with a single loan during the pandemic to steady cash flow

- Came back for working capital and asset finance as demand grew

- Five rounds of funding secured with us since 2022, each larger than the last

- Most recently, £2.75m arranged in two parts to clear expensive debt and fund the next stage

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The challenge

On paper the business was in good health. More than a decade of trading, strong net assets, and customers who paid eventually. The problem was getting at its own money. Nearly £1.9m was tied up in unpaid invoices while under £50,000 sat in the bank. Five loans taken over several years were priced between 8.9% and 14%, and cost more than £24,000 a month between them. There was plenty of demand. The trouble was that every new order made the cash position worse before it made it better.

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How we structured it

A sixth loan would have made the problem worse. The business needed two kinds of money doing two different jobs: something flexible that grows with the order book, and something fixed and long to clear the expensive borrowing.

- A £2m credit line that rises and falls with the value of unpaid customer invoices, so cash is there while the business waits to be paid

- A £750,000 loan repaid in equal monthly amounts over six years, which cleared the old borrowing

- Both parts priced at 4% over the Bank of England base rate, against fixed rates of up to 14% on the debt they replaced

- The government's Growth Guarantee Scheme used inside both parts, which is what made the overall size possible

- Both trading companies put forward together as a group, so the whole business was assessed rather than one company standing on its own

The Growth Guarantee Scheme sits inside both parts. That is what let the business borrow against more than its invoice book alone would have supported. It is how a company owed £1.9m by its customers ended up with £2.75m available to it.

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The impact

- £2.75m arranged in total. Around £450,000 of it cleared the five old loans. The rest is room to grow.

- Five lenders became one, and five monthly repayments became a structure the business can plan around

- Borrowing moved from fixed rates of between 8.9% and 14% to 4% over the Bank of England base rate

- The credit line grows as the order book grows, so the next large order does not need a new application

- The business completed its fifth round with us, at its largest scale yet

Cheaper money was only part of it. The bigger change is that the borrowing now matches how cash actually moves through the business, and there is roughly five times more of it. Building to order and then waiting 60 days to be paid is a working capital problem. A term loan on its own never fixes that.

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Takeaway

If your cash is stuck in unpaid invoices, the answer is rarely another loan. Usually it is the wrong shape of borrowing, not the wrong amount.