Borrower Service – Secured
Borrower rates from 8.70% p.a.
- All-assets charge against business
- Secure finance against Accounts Receivable (ARs) and/or contracted recurring revenue
- ARs uninsured/recurring revenue unassignable
- Membership of a professional body, prevents use of a controlled bank account
- Credit analysis, monthly monitoring, controlled bank accounts (where applicable)
This type of borrowing is usually a blend of our S&I or S&A services except that, for good reason, the borrowing company cannot get credit insurance (eg, providing services to HM Government) or we cannot obtain an assignment of contracts (eg, supplying software to large corporates under a contract with a non-assignability clause). The exact blend varies depending on Borrower circumstance.
We register a first all-assets charge at Companies House over the borrowing company. This means that, if the borrowing company defaults and we appoint an administrator, we have the first charge over the company’s assets. We perfect this with an ArchOver controlled bank account into which payments from Borrower customers flow. Except in the event of insolvency proceedings, the controlled account is cleared each day to the Borrower.
Should the Borrower be a firm of solicitors, we cannot operate a controlled bank account. Firms of solicitors operate with authorisation from, and are subject to, the rules of the Solicitors Regulatory Authority (SRA). The SRA does not allow lenders to operate a controlled bank account for client revenue. In this scenario, ArchOver’s charge could be open to challenge and reduces security on the loan. Firms of solicitors pay Lenders high rates of interest to compensate.
When assessing the maximum loan advance, ArchOver will consider the value of the ARs, deducting trade debtors out of term. The maximum loan-to-value of security provided is 90% against the trade debtors, plus 50% against the work-in-progress. Accordingly, the discounted security must always be equal to or greater than the loan value. Alternatively, we look at the revenue generated in a year from contracted recurring sources. When calculating this, we make an allowance for the customers who will be lost. This loss of customer base is known as 'churn' and should be in single digit percentages each year. The loan is usually no more than a 3-month advance against the annual contracted recurring revenue.
Lenders: Your capital is at risk and interest payments are not guaranteed if the borrower defaults. Historic loan default rates are not necessarily indicative of future default rates. Lending over the ArchOver platform is not covered by the Financial Services Compensation Scheme. The current average return is based on the total amount raised over the platform. It is the result of calculating the average Lender return, before tax, of every loan funded over the ArchOver platform. Borrowers: In the event of default, ArchOver will seek to recover assets to the full value of the loan. Understand more about: Detailed Risk Warning, Defaults, Recoveries & Losses, General FAQs .