For more than 20 years, this fire protection business had done what good operators do.
It had served its customers, built a reputation, employed people, paid suppliers, and kept going through the normal ups and downs of business life.
Then it hit a period that no owner can fully plan for.
A couple of unforeseen trading issues created two difficult years. They were specific to the business and the circumstances at the time, but they were not unusual in the broader sense. Every long-established business eventually has to navigate a period where events do not go to plan.
The directors did what many business owners would do
They used bank funding to keep operating while trading conditions improved. The overdraft helped them manage cashflow, continue paying suppliers, and carry the business through the rough patch.
They also took on a high-cost loan facility during that period. It was not ideal, but at the time it gave them access to the cash they needed to keep moving.
Then the day they had been working towards finally arrived.
Trading conditions started to improve. Revenue began moving back towards previous levels. The business was finding its feet again. The owners could see the recovery taking shape.
But the bank’s systems had reached a different conclusion
Looking back through the period of losses, tighter cashflow and increased borrowing, the bank decided it was time to stop supporting the overdraft and push the business to refinance.
From the business owner’s point of view, the timing could hardly have been worse.
They had done the hard part. They had traded through the difficult period. The revenue was coming back. But just as the business needed working capital to support the recovery, the bank was applying more pressure.
Lock Finance was able to take a more practical view.
We looked at what had happened, why it had happened, and what had changed. This was a 20-year operator in an essential industry. The downturn had specific causes. Trading was improving. The directors were committed. The business did not need to be forced into a corner. It needed a funding structure that matched the recovery now underway.
Lock Finance provided a working capital facility to replace the bank overdraft and support immediate cashflow.
That gave the business room to manage supplier payments, keep trading, and rebuild without the constant pressure of a bank exit hanging over it.
But there was another issue to solve.
The high-cost loan facility that had helped the business through the difficult period was now taking too much cash out of the company each month. If left in place, it would slow the recovery and make it harder for the business to get back to a stronger footing.
The directors were able to offer property as additional security. Lock Finance used that to structure part of the funding at more traditional interest rates, allowing the business to repay the expensive loan and significantly reduce its finance costs.
Innovative thinking is the difference
The bank saw historical pressure and wanted the overdraft gone.
Lock Finance saw a business that had already done much of the hard work, with improving revenue and a clear plan to recapitalise.
The directors had already decided to sell the property used as security, but they knew a good sale would take time. They did not want to be forced into accepting a lower value simply to satisfy a refinancing deadline.
Lock Finance’s structure gave them that time.
When the property sells, the proceeds will be used to clear the loan and inject further funds back into the business. That will strengthen the balance sheet and leave the company better placed for the next stage of trading.
For the owners, the outcome was immediate and meaningful.
The bank pressure was removed. The overdraft was replaced. Supplier payments became more manageable. Finance costs were reduced. And the business had the working capital it needed at the very point revenue was starting to recover.
They were extremely appreciative of the support and told us that, after the experience, they expected to remain a Lock Finance client for the long term.
Banks are often good at reading what has already happened.
They are not always good at recognising when the story has changed.
For this fire protection business, the difficult trading years were real. But so was the recovery.
Lock Finance was able to see beyond the rear-view mirror and structure working capital around where the business was heading, not just where it had been.
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