Transform Your Growth Strategy
Unlock your business's potential with our Block Discounting Facility
- Release Capital
- Expert Support
- Secure and Flexible
Block Discounting
Block Discounting is a versatile financing option where Conister Bank acquires the rights to receivables from finance agreements with the Borrower (Block Customer), providing immediate access to capital.
Financial Flexibility: Mastering the Mechanics of Block Discounting
The cover ratio (minimum 125%) is calculated using the average Internal Rate of Return (IRR) of the gross receivables divided by the Purchase Price/Advance Rate. It’s a measure to ensure the loan is adequately covered by the underlying assigned receivables.
The advance rate, typically between 70-95%, is based on factors such as dilution (arrears, defaults, and write-offs) and concentration (maximum single exposures). It determines the percentage of funds the Borrower receives against the assigned receivables.
Conister Bank will also expect to take a floating charge over the Borrower’s assets. On each drawdown underlying assets will be secured and assigned to Conister Bank through a deed of assignment.
Capital and interest repayments are structured to match the average repayment profile of the agreements purchased (up to a maximum of 7 years).
Explore our products
FAQs
How is the Borrower's financial performance monitored throughout the Block Discounting Facility?
Conister Bank reviews monthly management information and loan book data to monitor financial and non-financial performance covenants. Borrowers can provide open banking permissions as an alternative to monthly bank statements.
What security is required for the Block Discounting Facility?
Conister Bank mandates a floating charge on the Borrower’s assets. For each drawdown, the underlying assets are secured and transferred to Conister Bank through a deed of assignment, safeguarding the interests of both parties.
How does the advance rate work for a Block Discounting Facility?
The advance rate, generally ranging from 70% to 95%, depends on factors such as dilution (arrears, defaults, and write-offs) and concentration (maximum single exposures). This rate determines the percentage of funds that the borrower receives in relation to the assigned receivables.
What audits are conducted for a Block Discounting Facility?
A pre-lend audit is conducted initially, followed by quarterly audits, which may include both remote and on-site visits. These audits review financial performance, regulatory compliance, customer journey, and agreement details.
Looking for more details?
Our Structured Finance specialists are available to share how our Block Discounting solutions may benefit you.