Experiencing consistent or even rapid growth can be a challenge for a business operator, as counter-intuitive as that may sound to many, which is where an RCF (revolving credit) can offer a pillar of flexibility in your finance model. We have used RCF’s for clients who have approached us simply to fund the growth they’re experiencing, and where we have led clients through buyouts the RCF has been just as useful in the underlying capital raise. To understand why, we can look at some characteristics of such a credit line.

 

To get the greatest value from a flexible revolver, it works particularly well where a business trades with a regular and reliable customer base, and for growth to be consistent across that customer base. In part, this is because the facility can scale as your level of trading scales, which means your cost of finance is kept in line with the size of your business.
 

We have used this type of money in a variety of situations, including on a buyout of a wholesale company trading at £30m, and to fund growth for a food commodities supplier (we placed private investment in combination with the RCF) trading at sub one million – I make this contrast of business types to illustrate the broad application of this type of money in business expansion.
 

Essentially the RCF is a credit line that lets you draw down capital as trading volumes dictate, and it increases in line with that upward trend in trading, meaning your cost of money increases only when your revenues are growing. That growth can arise more traditionally from organic expansion, though we also deploy RCF funds into leveraged buyouts and structured refinancing when a client is perhaps raising investment from us or needing to re-price their current lending onto better terms.
 

With business sectors being reshaped in 2020 to a degree we’ve not seen for many years, consolidation and restructuring is on the increase, with expansion and acquisition opportunities becoming more ever-present as we move through Q3-Q4. For those businesses looking to take advantage of this Axial Capital is actively placing funds through the remainder of the year where your business proposition is sound. You can submit your deck or funding requirement via email (ventures@axialcapital.co.uk) or through the website directly in the Contact section.