$1.0m Business Loan Refinancing Equipment Debt and Improving Cash Flow

Over a number of years, the client had invested heavily in plant and equipment to support long-term growth and service major infrastructure contracts.

While the investment strengthened the business's operational capability, it also resulted in a substantial equipment finance portfolio with monthly repayments exceeding $87,000.

The business remained profitable and continued to win work from established counterparties. However, the repayment burden had begun to create pressure on working capital, leading to:

• Increased reliance on overdraft facilities.
• Arrears with some equipment finance providers.
• Reduced financial flexibility despite strong ongoing demand.

The core issue was not business performance. Rather, it was the size and structure of the existing debt obligations.

Fifo Capital provided a $1.0 million business loan to refinance the client's equipment finance portfolio and materially reduce ongoing debt servicing requirements.

The facility was structured over a 36-month term, including:

• An initial 12-month interest-only period.
• A subsequent 24-month principal and interest reduction program.
• Direct repayment of equipment finance lenders using drawdown proceeds.

The transaction was supported by:

• A second-ranking mortgage over a residential rural lifestyle property.
• Personal guarantees.
• Corporate guarantees.
• A second-ranking AllPAAP over the business.

For brokers, the strength of the deal was the security position and underlying business quality.

The property security was valued at approximately $2.79 million, with total exposure representing approximately 66% LVR, well within Fifo's policy parameters.

Importantly, the refinance reduced monthly debt commitments from approximately $87,500 per month to a significantly more manageable level, allowing the business to stabilise cash flow while continuing to service existing contracts and pursue future opportunities.