£13m Asset Finance Loan for Pharmaceutical Business

Asset finance can provide significant cost savings and flexibility for large corporations compared to traditional unsecured banking loans, particularly for major equipment purchases and logistics projects.

The Scenario

A large pharmaceutical corporation approached us seeking financing options for a major logistics expansion project.

They needed to purchase robotics equipment, conveyor belts, and dedicated software to enhance their operations, requiring a total of £13m in funding.

The company had already received quotes for traditional unsecured business loans through their existing relationships, but wanted to explore the possibility of more cost-effective alternatives.

The Solution

After carefully analysing the client's needs and financial situation, we advised on and secured approval for a £13 million asset finance credit line.

Key features of this solution included:

• Secured Loan: The loan was secured against the equipment being purchased, allowing for much more favorable terms.
• Significant Cost Savings: Because of this, we secured an interest rate 2 percentage points below the quote they had received for an unsecured loan (resulting in very significant savings on £13 million).
• Flexible Drawdown: The credit line allows for multiple drawdowns at different times throughout the project, with each hire purchase only crystallising at the point of drawdown.
• Interest Efficiency: The client only pays interest on the amount drawn down at each stage, rather than on the full loan amount from day one.
• Repayment Flexibility: Repayments are also only made on the amounts drawn down, improving business cash flow management.

Even though the business could have likely funded the equipment with their existing cash, they chose to finance the project for a number of reasons:

• By opting for asset finance, the company preserves cash for other business expenses rather than tying it up in assets.
• The interest paid on the business loan is tax-deductible and hits the profit and loss sheet, so can ultimately be offset against their corporation tax liability.

This case demonstrates our ability to provide innovative financial solutions for large corporations, leveraging our expertise in asset finance to achieve substantial cost savings and enhanced flexibility compared to traditional lending options.