Logistics Fleet Owner with TU H Grade Secures HK.2M via Sale-and-Leaseback

Logistics Fleet Owner Overcomes Personal Credit Impairment (TU H Grade) via Private Credit Sale-and-Leaseback

This case study analyzes a 14-year veteran Hong Kong transportation firm that secured a HK.8M civil engineering earthwork contract. The project mandated deploying four additional heavy-duty dump trucks within 20 days, creating a capital requirement of HK.2M against existing cash reserves of HK00,000.

Despite strong corporate operations and zero payment defaults, the founder’s credit score had dropped to TransUnion (TU) H Grade due to a historical third-party loan guarantee. Because conventional commercial loans and the HKMC SME Financing Guarantee Scheme (SFGS 80%) enforce strict hard-knockout rules on personal guarantors, applications across major retail banks were immediately declined.

SME Island structured an asset-backed private credit solution:

1. Asset Valuation: Conducted an expedited appraisal on two fully paid Euro VI heavy dump trucks owned debt-free by the corporate entity, confirming a liquidation value of HK.35M.
2. Sale-and-Leaseback Architecture: Executed a 24-month finance lease with a specialized private credit fund. The fund injected HK.2M in cash against clean vehicle title, while the vehicles remained in uninterrupted daily operation on site.
3. Legal Risk Ringfencing: Structured the facility strictly at the corporate balance-sheet level secured by asset title (lien), fully insulating the financing from the director’s historical personal credit impairment.

Within seven business days, the HK.2M proceeds were funded. Combined with internal reserves, the company secured the new fleet ahead of the contractual deadline, fully protecting commercial reputation and expanding fleet capacity.

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