£12.9 Million Refinance Delivers a £275,000 Annual Cashflow Improvement

A refinance isn't simply about a lower interest rate. The right structure can transform cashflow and fund the next stage of growth.

FTA Finance are delighted to have recently completed a significant £12.9 million refinance for an established and growing group of nine dental practices.

Like many groups that have expanded over a number of years, the borrowing had been built up gradually rather than designed as a whole. Facilities were spread across a combination of leasehold and freehold practices, and the arrangements had become increasingly restrictive as the business grew.

The existing debt was priced at 2.80% over Bank of England Base Rate, on a relatively short three-year committed term.

Following a full review of the group's requirements and detailed discussions with the specialist dental lending market, we arranged a complete refinance onto significantly improved terms:

• Interest margin reduced from 2.80% to 1.75% over Base Rate

• Goodwill borrowing structured over 15 years

• Freehold borrowing structured over 25 years

• Fully committed facilities

• No early repayment charges

• Minimal ongoing Covenants

• An additional credit line agreed to support future practice acquisitions

The combination of a substantially reduced margin and longer repayment terms has had a major impact on the group's finances.

Most importantly, the new structure is delivering an improvement in annual cashflow of approximately £275,000.

That is cash which now remains within the business, supporting investment, providing greater financial flexibility, and helping to fund continued growth. The additional acquisition credit line also means our client is well positioned to move quickly when the right opportunity arises.

Which raises a question worth asking of any established group.

When did you last review your borrowing?

For owners of larger dental groups, the funding arrangements that were right several years ago may no longer be the most competitive, or the most appropriate, for the business today. Lending appetite changes, the specialist market moves, and a group's own profile strengthens considerably as it grows.

As groups expand, there can be considerable value in reviewing existing debt structures, interest margins, repayment profiles and future acquisition funding.

A refinance is not simply about securing a lower interest rate.

The right funding structure releases cash back into the business, removes unnecessary restrictions, and provides the platform for the next stage of growth. In this case it was worth around £275,000 a year to our client.

If you own a dental group and would like us to review your existing borrowing arrangements, please contact us for an initial confidential discussion.