Finance Need: A business required a new to market digital garment printing press to meet increased demand in short run orders.
The Situation: The Customer was a relatively young business supplying short run printed garments to order, using social media and SEO as their primary introductory source. They were carving out a niche and demand was rapidly outstripping their ability to deliver. The new system would allow automated orders from 1-5,000 garments to be processed, ordered, shipped and delivered in a 24-hour window, maximising profits through a much more efficient and cost-effective production process. To add to the mix, this was both a new product to the market for the manufacturer into a strategically significant Customer and they were keen to secure the sale. The main concern was the age of the business and lack of experience of the proprietor, versus the size of the requirement and a rather unconventional business plan where the average order could be as low as one t-shirt with no long-term supply agreements to fall back on. Instead they had a large Customer base of 33,000 followers on social media and with increasing orders, needed this machine to keep on top of requirements.
What Arkle Did: Although the argument for the asset was strong, we needed to understand the potential exit route on this equipment. To move forward, the Arkle team met with the Broker,
manufacturer, supplier and Customer to gain a comprehensive understanding of the machine's use, potential, revenue generation, payback and, as necessary, next stages of life. With support from the supplier should any remarketing be necessary, and a clear understanding of the use and return on Investment from the Customer and manufacturer, the Underwriters were comfortable with this level of exposure and the machine deal was secured.
The Finance Solution: With the benefit of a full equipment valuation and a reasonable deposit volunteered by the Customer to reduce our day one exposure, the balance to finance was reduced to around £300,000 – something our credit team welcomed, and the agreement was financed over five years with guarantees from the two directors and a remarketing agreement from the supplier.
Arkle Comment: Although a complicated deal, it was written, and the agreement activated in less than a month. Using this collaborative approach, Arkle was able to deliver an effective solution to this burgeoning enterprise and all parties were grateful to our credit team for their support of this strategic Customer in their requirements.