Network Homes breaks new ground entering into trade loan agreement with Barclays Corporate Bank
09 May 2022
We've entered into an innovative agreement with Barclays Corporate Bank for an uncommitted trade loan facility. The product is thought to be a first for the social housing sector and offers access up to £12 million for working capital purposes.
A trade loan is a short-term revolving credit facility used to fund working capital. It’s typically used to provide a bridge for the timing misalignment of incoming and outgoing cashflows. The volatile nature of cashflows in the housing sector means providers like Network Homes may have a large outgoing one day then a large incoming cashflow the next. An example of this could include a large acquisition of land which leads to a large cash outflow, followed by an investment sale of stock generating a large cash receipt later in the same week.
The distinguishing feature of this trade loan facility is that instead of, for example, drawing down on the cheapest revolving credit facility with a minimum one or three-month interest period, we could use this trade loan for as little 14 days instead to optimise our financing costs whilst maintaining compliance with our cash holding policy.
It’s been great to work with Barclays Corporate on a product that will give Network Homes and other registered providers piece of mind. Over a number of months, we’ve back tested and tailored it, so it meets the needs of the social housing sector. As a component of our debt portfolio, we’re confident it will optimise our financing costs and strengthen our ability to deliver on our strategic objectives.Anup Dholakia, Director of Corporate Finance at Network Homes
Andy Taylor, Barclays Public Sector Social Housing Relationship Director, said: “We’re delighted to extend our relationship with Network Homes by providing this innovative unsecured working capital solution to smooth cashflow volatility, enhance liquidity management and generate more optimal borrowing cost efficiencies.”