A Second Facility When There Is Already a Debenture in Place
Where an existing lender holds a debenture and an assignment over your receivables but will not increase the limit, a second facility alongside it is usually possible, but not without the incumbent's agreement. Either the two lenders rank their claims over the same asset by deed of priority, or the second facility is secured on an asset the incumbent does not hold a fixed charge over and it releases or waives that. The obstacle is almost always commercial, not legal.
Start by asking the incumbent
Counter-intuitively, the first conversation is with the lender you are trying to work around. It needs to consent in most structures anyway, it may prefer to provide the additional facility itself, and its answer determines which of the routes below is actually open. Going to market first and discovering at the security stage that the incumbent will not rank is how these timetables get wasted.
The three routes, in order of how often they work
- Different asset, different lender. The incumbent keeps the receivables; the new facility is secured on something else, such as plant, vehicles or property. Consent is usually simpler because the incumbent is not being asked to share its own collateral.
- Same asset, ranked by deed of priority. Both lenders take a position over the ledger, ranked by agreement. Routine, but slower, and entirely dependent on the incumbent agreeing to rank.
- Replace rather than add. Where the incumbent will not co-operate, or is the actual constraint, a single larger facility from one funder is often cheaper over the term than two facilities stitched together.
The mechanics, and the realistic timetable
The security documentation, not the credit decision, is what sets the date you can draw. Rather than repeat it here, the full process, who signs, the typical timescales, the costs and the things that most often delay or block it are set out in the deed of priority guide. If your facility was withdrawn rather than merely capped, start from the withdrawn facility hub instead, because the timetable there is driven by someone else's notice period.
A second facility alongside an existing debenture is usually possible, but needs the incumbent lender's agreement to rank or release its security. The obstacle is commercial, not legal. More detail + scope
This page covers
second invoice finance facility alongside an existing debenture: consent, ranking, asset separation, and why the incumbent is the first conversation
Not covered here
Deed of priority process, timescales and costs (see the deed of priority guide), withdrawn facilities (see /bank-exit/), pricing (see /guides/costs/)
Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd
Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.
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