Manufacturing Revolving Credit
How Doulton Bridging Finance replaced a cancelled bank overdraft with a £200,000 revolving credit facility for a Midlands packaging manufacturer within 5 working days.
“Our bank cancelled our overdraft with 14 days' notice after 22 years. Doulton had a replacement facility in place before the notice period was even up. Better limit, better rate, and they actually understood our business.”
The Scenario
A family-owned packaging manufacturer in the West Midlands, producing corrugated cardboard boxes, display units, and bespoke packaging for food and retail clients, had operated a £75,000 overdraft with its bank for 22 years. The business had annual turnover of £3.4m, was consistently profitable, and had never exceeded its overdraft limit or missed a payment in its history with the bank.
The Challenge
Without warning, the bank notified the business in writing that it was withdrawing the overdraft facility as part of a 'portfolio review of unsecured SME exposures', giving just 14 days' notice. The directors had ten days to find an alternative before the withdrawal took effect during their busiest month. The operational impact was significant: a £47,000 raw material delivery was due the week after the notice period ended, on 14-day payment terms, and without the overdraft it would be covered by the business's own cash but only just, leaving effectively zero buffer. The finance director contacted Doulton Bridging Finance on the day the bank's letter arrived.
The Solution
The analysis was straightforward: a profitable, well-run manufacturer with 22 years of trading history, a clean credit profile, and a demonstrable working capital cycle was a strong candidate for an RCF from the alternative lending market. The bank's decision was a portfolio decision, not a credit decision, and the distinction mattered. We identified four specialist RCF lenders and approached them simultaneously with a concise credit summary covering turnover, EBITDA, credit profile, the reason for urgency, and three months of bank statements. Three returned indicative terms within 24 hours. We negotiated the best available terms, a £200,000 facility (nearly three times the cancelled overdraft) at 8.9% on the drawn balance, and fast-tracked the application. The facility was live within five working days of initial contact, on day five, with the bank's withdrawal taking effect on day fourteen.
The Deal Structure
| Facility Type | Revolving Credit Facility - unsecured |
|---|---|
| Limit | £200,000 |
| Rate on Drawn Balance | 8.9% per annum (daily calculation) |
| Commitment Fee | 0.75% per annum on undrawn balance |
| Term | 24 months, renewable |
| Draw/Repay Flexibility | Unlimited draws and repayments within the term |
| Security | Personal guarantees from both directors |
| Decision to Live | 5 working days |
The Outcome
The £47,000 raw material payment was met on time from the RCF. The business has since settled into a pattern of drawing £60,000 to £120,000 against the facility in the first half of each month and repaying as customer payments arrive in the second half, exactly the revolving working capital pattern the RCF is designed for. At the 24-month renewal point, the facility was renewed at a lower rate of 8.1%, reflecting the clean repayment history during the initial term. The business now holds the RCF as its primary working capital tool and maintains its bank current account purely for transactional purposes, with the bank that withdrew the overdraft losing the banking relationship entirely.