Working Capital Finance

[wes]

Hi

Need some advice please. Have taken on CEO position in travel business. Grow from R6M in first year to projected top line of R25M in next 15 months. Only 2 staff and home based office.

Wish to triple income generating staff and1 more Ops staff, with that matching costs and capex and premises etc, to double top line in the same 15 months + 6 months thereafter.

Just paid school fees exiting previous equity shareholder. Business has no asset base only projected income and PBIT based on that.

Wish to find finance through Angel investor or similar with no equity terms only interest on around R2M investment returnable over the 20 month period. How would i, if possible, structure that agreement ie. 1% of total creditor invesment per month with balloon or extension options at end of term?

Thanks for the consideration.....

[Basment Dweller]

What interest rate are you paying?

[wes]

Nothing agreed as yet looking for some guidance on that. Heard around 1% of total per month for 20 months and some sort of settlement end of term is relativity standard......there in my concern. Relatively...

[Basment Dweller]

What guarantees or collateral are you willing to provide the financier so that they get their cover?

[wes]

Sorry for the delayed response. Joys of building a guest house out of the way.

Basement Dweller - you asked what we would put in as weighting. The reality the business is show wonderful growth, but has not yet accumulated much in the way of assets. The shareholders have 'unbounded' assets with the best a property which is 98% bonded to a Bank. There is the option for a equity stake at the end of the agreement as a part of the capital agreement or slightly higher interest in the short term.

Based on the order book in the next 12 months, 50% of the capital loan will already be received in orders as GP Rands. Any advice?

[SoTrue]

A services firm will never grow significant assets.......