£50,000 Working Capital Facility for a Kitchen Supplier
Executive summary
| Borrower | Kitchen Company A, an expanding joinery and kitchen supplier |
| Funding request | £50,000 short-term working capital loan |
| Project | Supply and install 100 high-specification kitchens for a local residential property developer |
| Fulfilment period | Four months |
| Contract value | £350,000 |
| Illustrative structure | Subject to independent lender underwriting |
The opportunity
Developer Company B was delivering a new 100-unit apartment complex. The developer had a solid credit rating and a proven record of completing four previous developments. Kitchen Company A secured a business-to-business contract to supply and install 100 flat-pack kitchen units with quartz worktops.
Contract payment structure
| 30% deposit upfront | £105,000 |
| 40% midpoint and delivery payment | £140,000 |
| 30% final sign-off payment | £105,000 |
| Total contract revenue | £350,000 |
The cash-flow gap
Although the contract was profitable, the business faced a temporary working capital shortfall because major material and labour costs had to be paid before the first milestone payment fully covered the initial outlay.
| Bulk raw materials: cabinets, doors and hardware | £110,000 |
| Quartz worktop fabrication deposit | £25,000 |
| Labour and logistics | £20,000 |
| Total initial outflow | £155,000 |
£155,000 initial outflow − £105,000 deposit = £50,000 temporary cash deficit during Weeks 3 to 6.
Financial position
| Gross profit margin | 32% |
| Gross profit | £112,000 |
| Net profit margin | 18% |
| Net profit before finance cost | £63,000 |
| Loan as a percentage of contract revenue | 14% |
| Illustrative four-month interest (£50,000 at 10% per annum) | £1,666.67 |
The planned repayment source was the £140,000 midpoint payment due in Month 3.
Risks and mitigations
- Developer payment delays: The contract included late-payment penalty clauses. Kitchen Company A retained title to the goods until installation and payment, and the developer’s previous payment history was reviewed.
- Supply-chain disruption: Materials were sourced from two independent European suppliers rather than relying on a single vendor.
- Installation cost overruns: A separate 10% contingency reserve of £12,000 was included in the company’s internal budget outside the borrowed amount.
Finance structure and outcome
In this illustrative scenario, the facility is structured as a four-month unsecured business loan of £50,000, with bullet repayment planned for Month 3, supported by a director personal guarantee and an assignment of contract receivables. Based on £63,000 net profit before finance costs less £1,666.67 illustrative interest, the modelled net project profit is £61,333.33 after interest (before any applicable lender arrangement fees).
Figures are illustrative unless expressly stated otherwise and do not constitute an offer, quotation, recommendation, or guarantee of finance. Rates, fees, eligibility, and outcomes depend on provider assessment and individual circumstances.
BusinessLending.uk is a commercial finance introducer, not a lender. We do not make lending decisions or provide personalised financial advice. Finance is subject to lender assessment, eligibility criteria, terms and conditions.
