An established groundworks company in the North East of England secured a £50,000 Funding Circle business loan over six years to help repay existing company borrowing and release additional working capital for ongoing projects.
The business had traded for more than 12 years and had annual turnover of approximately £175,000. However, it was struggling to obtain recent, up-to-date full accounts from its accountants. Its latest filed accounts also showed a negative balance sheet position, which can make an application difficult for many lenders to consider.
With support from Jodi Bailey, SME Finance Hub was able to explore an option with Funding Circle. The lender’s online assessment process was able to consider the company using available credit history and online trading performance information, without requiring the client to provide documents upfront for the initial assessment. Following the client’s decision to proceed, the paperwork was completed online and the funds were paid out within 48 hours.
This is an individual case study. The outcome and timescale are not typical terms or a guarantee of what another applicant will receive. All lending is subject to status and lender approval.
The business and its funding needs
The client was an established groundworks company based in the North East, with more than 12 years of trading history and annual turnover of around £175,000.
It wanted to borrow £50,000 over six years for two related purposes:
- To help settle existing company borrowing, including a lease agreement and a higher-rate loan.
- To release additional capital into the business to support ongoing projects.
The client’s aim was not simply to take on more borrowing. It wanted to understand whether a new facility could replace some existing commitments, reduce the combined monthly payment burden and provide cash for the business. As with any refinancing decision, the overall cost and repayment commitments needed careful consideration.
A difficult accounts position
The business was facing a practical information challenge: it was finding it difficult to get recent, complete accounts together with its accountants. On top of that, its latest filed accounts showed a negative balance sheet position.
That combination can limit the number of lenders willing to consider an application. Some lenders rely heavily on current financial statements and may not be able to progress without them. A negative balance sheet can also raise questions about a company’s financial position, even when it has a long trading history and continues to generate turnover.
In this case, Funding Circle’s online portal was able to assess the application using available credit history information and trading performance history obtained online. This allowed it to make a near-instant initial decision without asking for documents upfront at that stage.
That does not mean every business can receive a decision this way. For this type of online assessment, the company and its directors will usually need reasonably clear credit profiles. A lender may request additional information or carry out further checks, and the outcome and timing will depend on the circumstances of each application.
Taking time to assess the offer
Once an option was available, Jodi gave the client time to review it rather than pressuring them to make an immediate decision. The client spent around a week working through the figures, including what it would cost to settle the existing borrowing.
That pause mattered. When a business is considering consolidating debt, a lower monthly payment does not automatically mean the new borrowing is cheaper overall. A longer repayment term may reduce monthly commitments, but interest can accrue over a longer period. Any fees, settlement costs on existing agreements and the total amount repayable on the new loan should also be considered.
After completing its calculations, the client chose to proceed with the £50,000 loan over six years.
The outcome: lower monthly commitments and working capital
The new facility helped the client settle the other company borrowing and release additional capital for its ongoing projects. The longer six-year term reduced the client’s overall monthly payments compared with its previous commitments, while providing money to support business activity.
The paperwork was completed online, and the funds were sent to the client. In this individual case, the process from proceeding with the offer to the funds being paid out was completed within 48 hours. This is a verified detail of this particular arrangement, not a promised timeframe for other applicants. Funding and timing are always subject to lender assessment, approval and completion of any required checks.
The client’s loan also allowed for early settlement should it wish to repay the facility ahead of schedule. Funding Circle’s published information says business loans can be settled early in full without an early-settlement fee. Early repayment may reduce future interest, but the amount payable depends on the loan’s terms and the settlement date. Businesses should check the applicable loan documents and request a settlement figure before making a decision.
What businesses can learn from this case
This case shows why it can be useful to discuss a funding need with a broker when accounts are delayed or filed accounts do not present the full picture. A specialist lender may assess an application using information beyond the latest accounts, but there is no guarantee that a lender will make an offer or proceed without supporting documents.
It also highlights a few points to consider when refinancing business borrowing:
- Compare the total cost, not only the monthly repayment. A longer term can lower monthly outgoings but may increase the total interest paid.
- Check settlement figures for existing borrowing. Early settlement charges or other costs could affect whether refinancing makes financial sense.
- Understand the new agreement. Review the interest rate, fees, repayment schedule, total amount repayable and any early-settlement provisions before committing.
- Consider personal liability. This Funding Circle facility required a personal guarantee from one director. A personal guarantee may make the director personally responsible for some or all of the debt if the company cannot repay, subject to the agreement’s terms.
- Keep the decision in the business’s context. Releasing working capital can support projects, but the company still needs to be confident it can meet the new repayment commitments alongside its other costs.
A business loan may be worth considering where repayments can be sustained and the finance supports a clear business need. It may not be suitable if the new term simply delays an underlying affordability problem, or if the overall cost is higher than the benefit of reducing monthly payments.
How SME Finance Hub supports business finance enquiries
SME Finance Hub works with businesses through a specialist lender panel and provides support from a named broker who can explain available options, costs, repayments, security requirements and any personal guarantee. Enquiring involves no hard credit search and does not affect your credit score; further checks may apply if you decide to proceed, and these will be explained beforehand.
There are no upfront broker fees and no obligation to proceed. If a facility completes, commission is paid by the lender and disclosed before you commit. In this case, the lender-paid commission was declared to the client in the loan documents and included in the fee deducted from the loan amount. The client did not pay a separate upfront broker fee, but the deducted fee reduced the net funds available to the business. The amount available and total cost should always be checked against the documents before accepting an offer. Read more about how we are paid.
Read more about SME loans, business loans and unsecured business loans, or visit Funding Circle’s official business loans page.
SME Finance Hub is a trading style of Capital Business Loans Limited, an FCA-authorised credit broker, not a lender. To discuss your business’s funding needs, call 01244 906505 or email hello@smefinancehub.co.uk.