Throw out the “rigid rulebook” approach: Flexible funding for flexible working spaces
4 min read
27 June 2018
iHub Office specialises in flexible, co-working spaces for small businesses – but the money to take on more premises has to come from somewhere.
DHR Business Solutions, trading as iHub Office, specialises in private office space and co-working/ hot-desking solutions, which have become very popular in recent years with UK SMEs.
Small, growing businesses are choosing not to tie themselves in to long term lease agreements, especially as they don’t always know how many employees they will have, or how much space they will need in the near future.
Co-working solutions – where many of the overheads are included – offer a more practical and flexible alternative. They aren’t tied in to anything, and the costs are kept low.
iHub offers these solutions for both established and startup businesses across two flagship office sites in Manchester and Birmingham.
The business has signed up to 10-year leases at these locations, with customer “license agreement” periods typically of 12 months.
The ask: Funding to take on new spaces
Of course, small businesses love solutions like this because it helps avoid large up-front costs – these costs are passed on to iHub, which has ambitious plans for the future.
Taking on new offices typically means shelling out one year’s rental deposit in advance. There is also significant capital expenditure and working capital required for a 10-12 week fit out period.
“The UK represents 36% of the serviced office sector globally and consequently there is a compelling opportunity for sustainable growth in this market” – Rico Wong, founder of DHR Business Solutions
The challenge: Securing finance
In order to grow, iHub needed investment from somewhere that would understand it’s non-traditional business model.
However, that proved to be easier said than done. Rico Wong, founder and CEO of DHR Business Solutions explains:
“This is a very capital-intensive business, predicated on the ability to make large rental deposit payments in addition to considerable up-front investment in respect of fit out and staffing costs.
“The traditional banks were completely unable to get their heads around our business model, despite them being able to see that we are operating a growing business.”
The solution: Looking beyond the high street banks
Wong decided to try his luck with an alternative lender. He settled on working with ThinCats, an online peer-to-peer lending platform that enables investors to make loans directly to businesses.
“That is why we wanted to work with ThinCats,” he said. “The company is truly a next generation lender, with the ability to understand the dynamics of a business that’s right at the heart of the ‘shared economy’ phenomenon.
“Unlike the banks, the ThinCats team listened closely to what we wanted to achieve and structured a facility that suited our needs precisely, rather than applying a rigid rulebook approach,” Wong continued.”
ThinCats ultimately delivered a £1,200,000 loan facility to DHR Business Solutions to help fund the company’s expansion plans.
Wong says he would not hesitate to return to ThinCats for funding for the business’ wider expansion programme as it develops in other major gateway cities.