BAD CREDIT · BUSINESS DEBT CONSOLIDATION · SALE & LEASEBACK
$150,000 Business Debt Refinance Despite a Serious Mortgage Default – Using Existing Vehicles to Reduce Repayments
| ASSET | 2012 Ford F350 and 2015 Holden Commodore |
| AMOUNT | $150,000 (combined refinance, including $58,417 funded directly by Bloom) |
| INDUSTRY | Manufacturing |
| CREDIT ISSUE | Substantial mortgage default, serious repayment arrears and multiple credit enquiries |
| CASH DEPOSIT | Nil – Sale & lease back |
| STRUCTURE | Bloom Rent-to-Own using existing vehicles, combined with a separate specialist business refinance |
| PURPOSE | Consolidate expensive business debt and significantly reduce monthly repayment commitments |
Scenario
A business owner approached Bloom with approximately $150,000 in expensive business finance across several lenders. Combined repayments were running at more than $20,000 per month, putting heavy pressure on the business’s cashflow.
The director’s personal credit file made refinancing particularly difficult. It showed a substantial mortgage default, extended repayment arrears and numerous previous finance enquiries. The adverse credit was serious enough that Equifax couldn’t generate a comprehensive credit score.
The business needed to reduce its existing repayments and create some breathing room, but the director’s credit history meant conventional refinancing options were extremely limited.
Solution
After reviewing the situation, we identified a few existing vehicles the client owned that could be used to help refinance the debt.
Rather than selling the vehicles outright or taking on another unsecured business loan, we structured a sale-and-leaseback arrangement. Bloom purchased the vehicles and leased them back to the business, allowing the client to keep using them while releasing funds to pay out existing lenders.
We funded $60k ourselves through Bloom Rent-to-Own and worked alongside another specialist lender who provided approximately $90,000.
Although the director’s mortgage default was an obvious concern, we needed to consider the broader picture. The business had strong revenue and assets available. By replacing the existing expensive facilities with longer-term finance, we could make a significant difference to cashflow.
The aim wasn’t to lend more money for the sake of it. It was to restructure what was already there into something more manageable.
Outcome
By refinancing the debt, we reduced the clients existing finance commitments from $20,162 per month down to ~$7,520 per month, freeing up $12,646 per month ($151,704 per year). The result is a significant reduction in repayment pressure, giving the business some breathing room to get back on top of its finances, pay down debt and focus on growing again.
WHY THIS DEAL COULD BE APPROVED
Existing Assets Available
The business already had vehicles we could use for the refinance. Rather than relying solely on the director’s credit history, we could structure our portion around assets Bloom would purchase and retain ownership of during the term.
A Genuine Cashflow Benefit
The existing repayments were putting the business under considerable pressure. By restructuring the debt over longer terms, there was an opportunity to meaningfully reduce the regular repayment commitments.
Looking Beyond the Credit File
A substantial mortgage default and repeated missed repayments would rule out plenty of lending options. We weren’t ignoring those issues, but we could consider them alongside the available security, the business’s circumstances and whether the proposed refinance made sense.
Working With Another Lender
Bloom didn’t need to fund the whole transaction. We worked alongside another specialist provider, with each of us funding a different part of the refinance. This allowed us to put together a solution that would have been difficult through a single lender.