The challenge
A 12-year-old precision engineering firm owned £600k of CNC kit outright but needed working capital to bid on an aerospace tier-2 contract. Overdraft was maxed and the bank wanted a debenture.
What we did
Sale-and-leaseback on the existing CNC machines released £420k cash overnight, repaid over 5 years against the assets' productive life. No debenture, no personal guarantee beyond directors.
The outcome
Aerospace bid won. Forecast £1.4m revenue uplift in year one. Refinance interest is fully tax-deductible against trading profits.
The full story
How the deal came together.
The opportunity
Briggate Precision had been quietly machining safety-critical components for the rail sector for over a decade. When a tier-1 aerospace prime put a tier-2 supply package out to tender, Briggate's technical track record and AS9100 accreditation put them on the shortlist — but the bid required evidence of £400k of working capital to cover the ramp-up phase.
The directors owned roughly £600k of CNC kit outright: two Mazak machining centres, a five-axis Hermle and a recently overhauled Studer grinder. The capacity was there. The cash wasn't.
Why mainstream lending didn't fit
The high-street bank offered to extend the overdraft — but only against a full debenture and personal guarantees from both directors. That was a non-starter; the family had spent twelve years building the business specifically to keep it off the personal balance sheet.
An invoice finance facility was floated, but Briggate's order book runs on six- to nine-month POs and a small number of large customers. Sub-optimal fit, expensive, and the concentration would have triggered debt-cap clauses.
Sale-and-leaseback against the existing kit
We arranged for an asset-finance lender to value the four CNC machines and advance £420k as a lump sum, repayable over 60 months. Legally the assets transferred to the lender; commercially nothing changed — the kit stayed bolted to the factory floor and Briggate kept producing.
No debenture. No personal guarantee beyond standard director indemnities. No charge on the property. The only security is the machines themselves, which Briggate continues to use as if they still owned them outright.
Tax and cash impact
Because the agreement is structured as a finance lease, the rentals are fully deductible against trading profits — sharper than the writing-down allowances Briggate was previously claiming on the owned kit. Their accountant calculated the effective post-tax cost of capital at under 5%.
Cash hit the bank nine working days after first conversation. The aerospace bid was submitted on time, and won. Year-one revenue from the contract is forecast at £1.4m.
"It freed up cash we already had locked in our own machines. Honestly the most useful £420k we've ever raised."
Could you fund this?
If your business looks anything like Briggate, the answer is almost certainly yes.