LOVE LOAN LIMITED

Executive Summary

Love Loan Limited is a start-up property and hospitality company with significant short-term liabilities covered by an £8m loan facility and group funding. While financially weak and non-trading, refinancing and intra-group support mitigate immediate credit risk. Conditional approval is advised, with close monitoring of cash flow, trading progress, and loan compliance.

LOVE LOAN LIMITED - Analysis Report

Company Number: SC699082

Analysis Date: 2025-07-29 18:58 UTC

1. Credit Opinion: CONDITIONAL APPROVAL
   Love Loan Limited is currently in the early stages of operation, having incorporated in 2021 and not yet commenced trading. The company demonstrates a significant negative working capital position with net current liabilities of approximately £6.86m as of June 2024, driven primarily by substantial short-term borrowings (£6.88m) owed within one year. However, the directors have secured an £8m term loan facility from RBS, repayable over 30 months and subsequently extended to June 2028, which provides liquidity to cover these liabilities. The refinancing and the group support from entities under common control, confirmed in writing, mitigate immediate liquidity concerns. The company’s financial statements were prepared on a going concern basis, supported by cash flow forecasts and external financing assurances. Although the current liabilities exceed current assets, the external loan facility and group backing justify conditional approval, subject to ongoing monitoring of cash flow performance, refinancing adherence, and trading commencement.

2. Financial Strength
   The balance sheet shows tangible fixed assets under construction valued at £6.86m, up from £6.1m the prior year, indicating ongoing capital investment likely related to property development or refurbishment (consistent with SIC code 68209: letting and operating own or leased real estate, and 56302: public houses and bars). Shareholders’ funds remain nominal at £101, reflecting the company’s infancy and lack of accumulated profits. The substantial bank loans classified as current liabilities (£3.1m) and amounts owed to group undertakings (£3.76m) total nearly £6.9m, causing a markedly negative net current asset position. Long-term liabilities were cleared in 2024 following refinancing. The company is reliant on external debt and intra-group funding, with no equity buffer or profitability yet. The absence of trading results and retained earnings means financial strength is presently weak and dependent on group support and refinancing terms.

3. Cash Flow Assessment
   Cash balances are very low at £1,613 as of June 2024. Debtors of £19,313 are minimal compared to current liabilities. The company has no trading revenue or profit streams yet, so cash flow is currently sustained through financing arrangements. The £8m term loan facility and group funding provide liquidity to meet short-term obligations. The directors’ cash flow forecasts and external financing facility are critical to ongoing liquidity. The loan repayment schedule extended to 2028 improves medium-term cash flow stability. However, the company’s ability to generate operating cash flow will be key once trading commences. Current liquidity is weak without these financing arrangements.

4. Monitoring Points

• Timely commencement of trading activities and generation of operating cash flows.
• Adherence to loan repayment schedules and covenant compliance under the RBS facility.
• Any changes in the support from group undertakings or withdrawal of intra-group funding.
• Movements in working capital, especially current liabilities versus current assets.
• Progress and capitalisation of tangible fixed assets under construction, including impairment risks.
• Directors’ continued validation of going concern assumptions and cash flow forecasts.

Executive Summary:
Love Loan Limited is a newly incorporated, non-trading entity with a substantial negative working capital position funded through an £8m external loan facility and intra-group financing. The company’s financial strength is currently weak, relying heavily on group support and refinancing arrangements. Conditional approval is recommended, contingent on monitoring trading commencement, cash flow generation, and adherence to refinancing terms to ensure ongoing liquidity and creditworthiness.