With the bounceback loan now moving steadily along, I thought it best to tell you a little story. Here’s an example of a client we’ve helped to save themselves quite a lot of money by using the bounce back loan to replace their working capital facility. Let’s hear from the client:
Graysonfish is a small business and we’ve been going for nearly five years, our turnover is about £400k. We’ve used a factoring facility to fund our working capital, mostly debtors, since the start because as a new business this was all that was available.
During one of my chats with Jason, he suggested that we apply for the bounce back loan. If we were successful, we could end our factoring arrangement and look to save costs.
“Sounds great,” I said. Jason helped us make the application and a few days later we had £50k sat in our bank account. Our factoring facility normally peaked at around £30k and so we’ve given notice on the facility and will pay it off with the loan funds.
Our factoring fees were on average £900 per month and the interest on the new loan will be £100 per month, and no interest or repayments in the first year.
If things go to plan, the saving in fees will pay off the loan. In a few years, the loan will be paid off and we won’t need any working capital facility, what a result!
A few words of warning, this works if your business turnover is not expected to grow quickly, factoring is a great way to finance working capital in a high growth period.
