Adam Stiles, Mortgage and Protection Consultant at Keystone Wealth Management Ltd, sheds a light for us on Revolving Credit Facility (RCF).
He does so by describing a real case study he experienced when a client specifically requested an RCF to purchase their own land to develop.
Having reviewed all the facts, Adam decided to advise them for an alternative solution, based on aspects of RCF other operators often times don’t take into account.
“A business with £150m turnover (which is traditionally a construction contractor) wanted to purchase their own land to develop and approached me to require a £20m Revolving Credit Facility (RCF).
However, as there were no assets to assign this to, apart from the balance sheet, I agreed with the lender a facility in which they assisted on a case by case basis, until they have enough assets to take security over.
The misconception I have come across a number of times is that an RCF saves time and there are less restrictions.
Facts show that this is not the case – RCF would still need the same due diligence on each site, and the process is largely the same.
RCF also comes with a large drawback – a non-utilisation fee.”
Mortgage and Protection Consultant at Keystone Wealth Management Ltd
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