A young refrigeration maintenance company is hoping to secure a £150,000 short-term loan through a peer-to-peer lending platform to help it through a difficult period brought on by a major client going bust.
West Yorkshire-based Impellico Services, which is now in its fourth year of trading, specialises in installing and maintaining refrigeration equipment in supermarkets.
The business, which employs five people, is on track to make sales of £1.3m this year, up from just £220,000 last year. In August it turned over more than it did in the whole of 2012.
But disaster struck last month when one of its largest customers plunged into administration without warning.
Co-founder Ed Sanders has now turned to Rebuildingsociety.com in an attempt to secure a loan to help it manage short-term cash flow challenges caused by the administration.
“They owed us more than £150,000,” he told the Yorkshire Post. “2013 was going to be extremely rosy for us and suddenly that happened.
“Although it hasn’t affected our order book, our current clients have been excellent and kept our order book filled, we have plenty of new work in the pipeline. The problem is going to come when we look at our short-term cash flow. A six-figure sum like that is a large amount to effectively go to bed with one night and wake up without.”
Rebuildingsociety.com is a peer-to-business lending platform that connects creditworthy UK businesses looking for a loan with individuals prepared to lend their own money for returns that outstrip retail savings products.
The peer-to-business lending market is one section of the ‘crowdfunding’ movement and is sometimes described as ‘crowdlending’ or incorporated into peer-to-peer lending.
Sanders said that using the concept to raise finance was a more viable option than approaching the bank.
“We are clearly not a risk-free option for the banks,” he said. “We do have a finance facility with a major bank but it’s not the most flexible in the world and for them to supply us with the short-term working capital we need is quite a big ask.”
Organisations apply to be listed on Rebuildingsociety.com and must meet certain criteria. Lenders will then propose an interest rate according to risk and companies can decide whether to accept.
“We had been looking to break even this year after a long period of growth at the expense of margins, but the client going into administration will leave us facing a loss-making 2013,” said Sanders. “However, we are making a month-on-month profit and that profit will be sufficient to trade through the loss by the end of 2014.”