EssenceLabs Hair Studio Business Plan — The Funding Proposition
R1.40m founder equity, a R1.00m term loan, R322k asset finance and a R650k revolving facility: structure, security and drawdown.
The Funding Proposition
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- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. The Business
- 3. Market Analysis
- 4. Service Offering, Pricing and Yield
- 5. Operations
- 6. Marketing and Client Acquisition
- 7. People and Management
- 8. SWOT and Competitive Position
- 9. Financial Plan
- 10. Break-Even and Sensitivity
- 11. Risk Management
- 12. The Funding Proposition
- 13. Implementation Plan
- 14. Key Performance Indicators
- 15. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Debt Schedules
- C. Appendix C: Risk Register
- D. Appendix D: Assumption Register
- E. Appendix E: Glossary
- 12.1 What is sought
- 12.2 Proposed covenant package
12.1 What is sought
|
Facility |
Amount |
Rate |
Term |
Purpose |
Security |
|---|---|---|---|---|---|
|
Term loan |
R1 000 000 |
13.50% |
Seven years, twelve-month capital moratorium |
Fit-out and installation |
First covering bond over the fit-out; personal surety |
|
Asset finance |
R322 000 |
15.0% |
Four years |
Furniture, technical equipment and point of sale |
Special notarial bond over the financed assets |
|
Revolving facility |
R650 000 |
Prime plus 4% |
Annual review |
Trading deficit and seasonal working capital |
Cession of card takings |
|
Total debt sought |
R1 972 000 |
Alongside R1 400 000 of founder equity |
12.2 Proposed covenant package
|
Covenant |
Proposed structure |
Base case position |
|---|---|---|
|
Debt service cover |
Holiday through Year 2; 1.00x tested at the end of Year 3; 1.25x from Year 4 |
0.95x at Year 3, 1.27x at Year 4, 2.40x at Year 5 |
|
Facility utilisation |
Not to exceed 90% of limit at any quarter end |
Peak 77% of limit in Year 4 |
|
Capital expenditure |
Limited to the approved fit-out plus maintenance |
Maintenance of R60k to R140k a year, deferrable |
|
Distributions |
Restricted until cover exceeds 1.25x for four consecutive quarters |
No distribution assumed in the forecast |
|
Reporting |
Monthly management accounts; quarterly covenant certificate; annual reviewed statements |
From month one |
|
Utilisation reporting |
Weekly chair utilisation reported quarterly to the lender |
The leading indicator of every other covenant |