More than skin deep

Success Factors

  • Due diligence process that went above and beyond normal requirements. We conducted detailed review/research of the client, industry and the asset in order to provide strong mitigating factors where no financials were being submitted. 
  • Breakeven analysis of the positive impact that financing this asset would have on the business, with supporting evidence. This analysis proved crucial for the deal to be cleared.

The Situation

The client owns and runs a beauty and skin care clinic, which is in its third year of operation. She wanted to introduce a HydraFacial treatment to her existing range of skin care services.

A brand new hydra facial machine was required and was available from an authorised dealer. This type of machine is quite niche and is operated only by specialist beauty therapists.

The HydraFacial treatment ‘removes dead skin cells and extracts impurities while simultaneously bathing the new skin with cleansing, hydrating and moisturizing serums’.

 

The Challenges

This scenario did not tick all the boxes:

  • The business had been operating for just under 3 years and the most recent years financials were not yet ready
  • Year 2 was still a growth year so it did not represent the full potential of the business, serviceability for the proposed loan was weak based on this year
  • The machine has a niche purpose and can only be operated by specialists, and therefore not readily resaleable, given its narrow market appeal
  • The client was not a property owner and has not had asset finance before so this increased her risk profile substantially
  • She was reluctant to contribute a deposit as she was preparing to purchase her first property.

At SF Capital, we believe there is a lender for every client and our role as broker is to source that lender.

The Results

This is how we went about solving each and every challenge and secured a lender for the client:

  • In preparing for our pre submission queries, we were able to identify serviceability would pass strongly if the additional revenue from acquiring the new machine was included
  • We then prepared and submitted a break even analysis to lenders that showed she would only need to treat 2 customers a month with the new machine to cover the repayments
  • From our own research we also identified the manufacturer of the machine provided extensive resources and marketing support to assist purchasers with increasing adoption rates
  • We were able to present 2 lenders that could both finance the full amount where repayments could be covered if 2 – 3 customers took the treatment per month
  • These lenders did not need income verification as they were happy to approve the loan based on a lo doc loan plus the break even analysis with supporting evidence

The new hydra facial machine has unlocked an additional revenue stream for our client’s business, while providing a value-adding service to her clientele.

WHO TO TALK TO

Luke Xie
Finance Broker