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A company operating in the metal recycling industry was planning to secure significantly larger bank financing. However, its existing overdraft facility and short payment delays of up to 30 days visible in its credit history created an obstacle. Rather than financing the company's long-term needs, PaveNow provided a bridge solution. The client received PLN 350,000 for 3 months to repay the overdraft facility. The financing was structured with low ongoing principal and interest instalments, with a larger portion of the principal repaid as a balloon payment at the end of the term. After three months, the client secured larger bank financing and used part of the proceeds to repay the remaining obligation to PaveNow.
The client was a company operating in the metal recycling industry. The business was actively trading and meeting its ongoing financial obligations.
Its credit history showed short payment delays of up to 30 days. However, these delays were not the result of a lack of business activity or a sustained loss of liquidity. The client was actively raising the funds needed to meet its obligations and continued to settle them, although not always by the original due date.
PaveNow therefore did not assess the situation solely on the basis of the recorded payment delays. It was important to understand why they had occurred, how the company operated on a day-to-day basis and what its plan was for the following months.
The immediate purpose was to secure PLN 350,000 to repay the existing overdraft facility.
This allowed the client to reorganize its current obligations and use the following three months to prepare the company for significantly larger bank financing.
PaveNow therefore provided capital for a transitional period. The financing was not intended to replace the bank, but to help the client prepare the company to obtain a larger bank loan at the next stage.
The company planned to secure significantly larger bank financing in the following months. Before doing so, however, it needed to repay its existing overdraft facility while keeping its ongoing financial burden as low as possible during the three-month period.
Another factor was the short payment delays visible in the company's credit history. PaveNow took them into account in its assessment, but also analyzed their underlying cause, the company's ongoing operations and the source of the final repayment.
The challenge was therefore not simply to provide PLN 350,000, but to structure the repayment schedule appropriately. Repaying the entire amount through high monthly principal instalments over just three months would have put renewed pressure on the company's liquidity.
This is why a balloon payment became an important part of the solution, allowing a larger portion of the principal to be deferred until the end of the financing term.
PaveNow provided PLN 350,000 in financing for a period of 3 months. The funds were used to repay the client's existing overdraft facility.
Given the bridge nature of the financing, a balloon payment structure was used. Instead of spreading PLN 350,000 across high principal instalments over a very short period, the repayment schedule provided for low ongoing principal and interest instalments, with a larger portion of the principal due at the end of the term.
This allowed the client to keep its ongoing financial burden lower for three months while preparing to secure larger bank financing. Once the bank financing was obtained, the client repaid the remaining obligation to PaveNow.
In this case, PaveNow financing served as a short-term bridge to the company's longer-term bank financing.
The financing allowed the client to repay its overdraft facility without having to commit all of its available own funds to that purpose. At the same time, the balloon payment structure reduced the level of ongoing payments during the three-month financing period.
During this time, the company prepared for the next stage and secured significantly larger bank financing. Part of these funds was then used to make the final repayment of the obligation to PaveNow.
The transaction was therefore completed according to the intended scenario: PaveNow financed the transitional period, and after three months the client moved to its longer-term bank financing.
The case also demonstrates the importance of assessing payment history in context. The short payment delays were not ignored, but neither were they assessed in isolation from the other information about the company. Understanding why they had occurred, the company's current financial position and the actual source of repayment were all important parts of the assessment.
This case shows that non-bank financing does not always have to replace a bank. It can also serve as a bridge to bank financing.
If a company wants to secure a larger bank loan but first needs time and capital to reorganize its current obligations, short-term financing can help bridge that gap.
The repayment structure is equally important. A balloon payment can make sense when a company needs to limit its ongoing financial burden and has a clearly identified and credible source for repaying a larger portion of the principal at the end of the term.
In situations like this, the key question is not simply whether the company has had payment delays in its credit history. It is more important to understand why those delays occurred, what the company's current situation looks like and how the financing will ultimately be repaid.