Refinance agreement releases funds for new carpet recycling business – Innovate Recycle Ltd
Often, in order to grow your business and take it to that next stage, a cash injection is needed, this is where refinance can be useful – find out how Close Brothers Asset Finance helped a carpet recycling business to release funds held in their existing assets…
Customer background
Innovate Recycle Ltd was formed in early 2018, the business specialises in carpet recycling on a volume scale. This kind of recycling is required as the UK currently generates approximately 500,000 metric tonnes of post-consumer carpet waste every year. Currently there is no effective, at volume, recycling process, Innovate Recycle plan to change this.
After recycling carpets, the business is able to recapture a polypropylene fibre which can then be extruded into pellets. Demand for recycled plastic is increasing at the moment due to restrictions on the manufacturing of new plastic, this means Innovate Recycle is working hard to keep up with demand.
Opportunity
The business spent their initial three years carrying out market research, getting the right people on board with the project and raising capital. Innovate Recycle was then due to start trading in 2021 but due to the ongoing pandemic delayed this to June 2022.
Before launching to the market, the business wanted to have a cash reserve for any unexpected costs within the first few months of trading. It was at this stage that Joseph Eccleston, CEO of Innovate Recycle Ltd got in touch with Close Brothers Asset Finance for a solution.
Solution
In order to release the necessary capital, we proposed a Sale and HP agreement. This is a form of refinance that can be used against most types of equipment. In a Sale and HP agreement Close Brothers Asset Finance purchase the asset and finance it back to the company. Repayments are calculated in line with the income stream that will be generated by the asset and at the end of the refinance term, Innovate Recycle will own the asset.
In this agreement, the assets refinanced included three shredders and a pelletiser.
Outcome
Through the refinance of their assets using a Sale and HP agreement, Innovate Recycle was able to free up £1million of capital, giving them cash reserves during the often unpredictable initial months of business.
Close Brothers Asset Finance: “Helping our customers release capital through refinance agreements is often necessary. A Sale and HP agreement can help provide much needed cash to fuel growth plans. I look forward to seeing Innovate Recycle grow further with Joseph at the helm.”
“The team at Close Brothers Asset Finance were a great help during our initial months of operations, the agreement they provided was executed quickly and we were pleased with the outcome. I would certainly work with Close Brothers Asset Finance again in the future.” Joseph Eccleston, CEO of Innovate Recycle Ltd
