What are the benefits of a syndicated finance deal?

One of the biggest advantages of using Portman as your lender and broker is our ability to produce tailored finance packages using what we call ‘syndicated deals’. So, what is a syndicated deal and how does it make a difference to our customers? Here’s the lowdown from two of our own finance experts:

What is a syndicated finance deal?

Tom Simpson, Executive Commercial Broker at Portman advises:

“A syndicated finance deal is one where we source your funds from multiple lenders to meet the overall requirement for your project. This can either be to reach a larger funding value, or to source different types of finance best suited to your purchasing needs.”

“After understanding the customer’s needs, we then approach individual lenders directly and pitch for each element of the funding.”

Give us an example:

“My customer needs £500,000 for expansion. £250,000 of that is for a building refurbishment, £170,000 is for stock and inventory, £50,000 is for delivery vehicles, and £30,000 is for warehouse racking. It doesn’t make sense that the customer take one finance agreement when we have lenders that specialise in each of these areas, meaning we can usually obtain better rates tailored to each part of the project.”

“Think of this like splitting your tickets on a train journey. Sometimes you can get a better deal if you divide your journey, or in this case project, into parts. Even though your end point is the same, we might be able to make it cost less or more manageable by dividing it up.”

3 main benefits of a syndicated finance agreement

1. It can ensure that a cash loan remains unsecured if the business funding requirement is high.
Many lenders have a limit to their unsecured loans despite the viability of the customer. This way if your business needs £400,000 for example, we can divide the requirement into 3 agreements and ensure you obtain the funding you need, whilst retaining the benefit of an unsecured loan.

2. It allows your business to achieve interest rates appropriate to each element of your requirement. Vehicle finance, soft asset finance, term business loans and short-term cashflow loans all attract different rates due to their level of security. If we can obtain a better deal particularly by separating types of asset finance from business loans, that could make your monthly payments more manageable.

3. It means you can take different terms based on the actual needs of your business. If you want to spread the cost of a refurbishment over 5 years but only needed a 6-month short-term loan for stock because you’re able to pay it back more quickly, Portman can do this. In contrast a single lender would likely put everything together into one product and you could be paying the whole amount back over 5 years, which has the potential to cost you much more in overall interest.

What does this mean for our customers?

If you approach a single lender such as a bank, you’ll most likely get a yes or no to the whole funding requirement, tied to one finance product at one rate. If you get rejected, this could hit your credit rating and leave you unsure where to turn.

At Portman we’ll discuss your entire project and use our understanding of the market to determine if there’s a better combination of funds that achieve the value you need, or are tailored to the purchases you need to make. We will pick the right lenders who specialise in your needs and your situation, with the aim of getting all the funding you require.

Let’s bring this to life with a recent example

Dan Ball, Executive Broker at Portman, tells us about a recent customer experience:

“One of my customers required over £500,000 for the refurbishment of a building to create a new bar in Scotland. The total value of the project was too high for one lender to approve so he came to Portman for help. I assessed the project as well as quotes from over 60 suppliers then broke-up each major part into a package of works or assets and found specialist funders to support each element.”

“We were able to fund everything within the bar: the lights, the audio system, the fire alarm, the bar, the HVAC, the furniture, all the electrical and decoration works and even the tiling, all with specialist asset finance. Many businesses don’t realise that asset finance can be used to this extent. I was then able to support cashflow needs for stock and operational costs with some short-term funding, which would be repaid before the asset finance, allowing the customer to benefit from different terms.”

“This kind of service and finance structure simply would not be possible with banks or traditional lenders and extremely difficult for the customer themselves to navigate. This support is the real benefit of working with ourselves at Portman.”

If you’re the kind of director that sees the benefit in this level of expertise, you’re our type of business. Give us a call.

At Portman, we appreciate how challenging it can be for business owners to navigate the world of finance. Our expertise can find the right solution for your project, whilst you continue running your business.

Asset Finance is perfect if you need new equipment or vehicles, but can also be used for a huge range of interior fixtures, fittings and works. Its secured nature often means rates are better than a loan for the equivalent situation. Our short-term finance and business loan solutions can then provide the funding you need to cover operational costs. Email us today or call 01604 761276 to learn how we can support your business growth.

Written by Saul Michelson

Head of Marketing

Degree and Post-Grad qualified with 23 years business-to-business experience, Saul is a well-rounded senior professional. A previous winner of Marketing Week’s ‘Best B2B Campaign’ award and two Construction Marketing Awards, Saul enjoys finding out what makes businesses tick and writing articles that get straight to the point.

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