Case Study: Two truck loans in a short time
Client Background:
A small logistics company in Point Cook, Victoria, with one truck in operation, approached us with an ambitious goal: to acquire two new trucks to expand their fleet. The owner of the company was determined to tap into new opportunities in the logistics sector, but faced financial hurdles in securing the necessary funds for this expansion as it was new business and profit margins were thin. The owner had already placed orders for two trucks, which were scheduled to arrive in a few days. We were contacted through a personal reference, and we stepped in to assist.
Trucks Needed:
Truck 1: Isuzu Truck 3 Axle Rigid - 16.5 Tonnes with 14 Pallet Curtain-sider with Tailgate
Truck 2: Isuzu Truck 2 Axle Rigid - 12 Tonnes with 12 Pallet Curtain-sider with Tailgate
Challenges Faced:
The logistics industry is extremely competitive, and our small logistics firm needed additional trucks to expand in order to meet rising demand. However, their financial situation was complex and made obtaining a loan difficult, not just one truck but for two trucks. Their business setup was new, with only one truck in operation, and their revenue was in its infancy. Traditional lenders were reluctant to provide a loan for the acquisition of two additional trucks due to these factors. Also, the customer was interested in obtaining a good loan offer.
Our Solution:
We conducted a comprehensive analysis of the company's financial statements, tax returns, existing long-term contracts, and potential growth, drawing on our experience navigating similar complex financial situations. Despite the obstacles, we saw the potential for the company to succeed with the expansion. Using our long-term relationship with our aggregator, which is also Australia's largest asset finance aggregator, we started a multi-pronged plan to solve the problem. We came up with a plan that involved collaborating with two different lenders to address the concerns and meet lender policies.
Truck 1: Established Bank with Asset-Based Lending:
For the first truck, we approached a traditional bank that provided asset-based financing. We organised the proposal in such a way that we could use the assets that were already in existence as collateral, and this strategy assisted in reducing the lender's concerns regarding the early-stage revenue of the business. We were successful in getting this lender's approval for the financing of the first truck by using the revenue from both the currently operating truck and the upcoming new trucks.
Truck 2: Non-Traditional Lender Specialising in Trucks:
We identified a non-traditional lender that focuses on supporting new SMEs in their early stages. We created a convincing application that highlighted the business owner's industry knowledge, the strong market opportunity, the anticipated increase in revenue from the new trucks, and the available collaterals. Before submitting the application to the credit team at the lender, we also collaborated closely with the BDM of this lender to present an in-depth overview of the company's strengths and obtain approval. This lending institution was more receptive to this strategy and agreed to finance the second truck.
Outcome and Impact:
The logistics company was delighted with the tailored financing solution we arranged. We secured approvals from both lenders, facilitating the logistics company's purchase of two new trucks. The two additional trucks not only increased the company's capacity to serve more customers, but they also created job opportunities for two additional drivers. We not only contributed to the growth of their business by successfully securing financing for the expansion, but we also played a role in creating jobs and enhancing their overall impact in the local community. Witnessing success stories such as these reaffirms our dedication to assisting new business owners in achieving their goals through strategic and innovative financial solutions.
