Breaking a debt cycle for a communications sector business

A communications business had found itself trapped in an expensive borrowing loop, returning to the same lender every few months for another top-up, paying a high rate each time, and never quite getting ahead of its repayments. Senior Funding Account Manager Liam Francis stepped in to break that pattern, structuring a refinance that cleared the existing debt and put a more flexible facility in its place. Here's how the deal came together, and what it's meant for the business since. Stuck in a loop with the same lender, every few months

The business had taken an initial loan to plug a cash flow gap and had been going back to the same lender ever since for one top-up after another. Each one came at a high interest rate, and the repayment structure meant a large part of the business's monthly cash flow was going straight back out the door, which made the next top-up almost inevitable. This pattern wasn't sustainable. Monthly commitments had grown too high to allow the business to invest properly, and the interest costs were compounding the problem rather than solving it. What the business needed wasn't another short term fix. It needed a full refinance: one that cleared the existing debt at a lower rate and left a flexible credit line in place for future needs.

A two part refinance that broke the cycle

Senior Funding Account Manager, Liam Francis, worked with lender Credit 4 to design a two part facility: one part to clear the existing debt outright, and a second to give the business genuine flexibility going forward. The first was a £105,000 term loan, secured at a materially lower rate, used to clear the existing facility in full. The second was a £10,000 revolving credit facility (RCF), giving the business somewhere to turn for cash flow variations without a fresh application each time. Together, the two facilities cut the monthly repayment burden and removed the need for the pattern that caused the problem in the first place.

"The client had been paying over the odds for a long time, and the lender they were with wasn't incentivised to offer them anything better. Once we were able to show Credit 4 the full picture — the business performance, the predictable revenue, the reason for the borrowing — it was straightforward to get a much better deal. The RCF on top means they won't need to go back into that cycle again."

— Liam Francis, Senior Funding Account Manager, Capitalise

Stability, reinvestment, and no more reapplying

With the high interest debt cleared and a revolving credit facility in place, the business now operates from a position of stability rather than constant catch up. The lower monthly commitment has already started to free up cash flow that can be put back into the business, rather than absorbed by borrowing costs.

Just as valuable is the flexibility the new structure provides. The directors no longer need a new loan application every time cashflow tightens or an opportunity comes up; they can draw on the RCF as needed and repay it as suits the business. For a company that had been locked into a repetitive borrowing cycle, that's the real result: room to plan ahead, invest with confidence, and absorb the normal ups and downs of trading without it turning into another high cost loan.