Specialist, Niche & Bespoke Commercial Finance

Background, Challenges & Outcome

In this case the property was already owned with the client looking to raise finance against the asset so they could purchase another investment property.

The complexity was that the tenant was a corporate entity rather than an individual who would be subject to a standard Assured Shorthold Tenancy (AST). This alone is an issue to many mainstream buy to let mortgage lenders.

What made this more complicated was that the corporate tenant was a company owned by the client, for many lenders it would appear to be the borrower letting their own property to themselves.

In many cases like this it is about proving the deal makes sense. The client used the property as a base for staff who would otherwise find the cost of living in London prohibitive. By offering accommodation the client could attract quality staff and retain them, subsidising their rent as part of their employment contract.

By proving why the deal makes sense and showing that the corporate tenant was liquid and could afford the rentals we overcame the lender objections.

A total of £324k of buy to let finance was agreed and completed in February 2020 with the client purchasing an additional property for the same purpose afterwards.

Background & Challenges

The property in question was straightforward. It is often the case that the property is more complex than the borrower, in this instance the reverse applied.

The borrower was a foreign national who resided outside the UK. In addition they were exempt from filing a UK tax return. The tax on the rental income was deducted at source via an HMRC scheme.

To add a further complexity, the finance being raised was to be used to inject into the client’s business which traded out of Milan.

In this case the client had sought borrowing from other lenders and failed due to a combination of the factors above.

Part of this case was about recognising why lenders had concerns with the client and addressing those directly. We provided confirmation of the tax scheme operated by HMRC as well as confirmation of how the property was managed, including the Process Agent being used.

By taking the time to look at the challenges and work with the lender to address them we were able to secure the finance the client wanted.

A loan of £360k was agreed in August 2020

BACKGROUND

The business was established and proven. The circumstances were exceptional with the client being
understandably unprepared. There was an offer of finance made by the client’s bank which they were close to accepting.

THE CHALLENGES

The bank finance offered was good but fell well short of what was required. The client was left with the impression that the bank offer was the ‘best’ offer. In terms of cost of finance it was, in terms of need it definitely fell well short. We had to find a better option that met the true needs of the business.

WHAT WE DID

We took a step back and looked at the numbers for 2020 and 2021, recognising that the cash flow challenge was going to be more long term. We then worked with the client’s accountant to establish a figure that was needed from the finance to make things work. This was not about just the cost of finance, it was about ensuring the finance on offer was suitable and did the job.

By working with a lender who could lend what the client needed we secured £183k of CBILS finance, being £120k more than their bank proposed. This was completed in May 2020.

BACKGROUND

A freehold property consisting of six separate apartments was owned with the client wanting to release more cash against the property to fund their next acquisition. The property was non-standard with various quirks and unusual aspects.

THE CHALLENGES

The freehold was a multi-unit block, one of the flats had limited access and another was too small for a
conventional mortgage lender to secure against. In addition, the property had been converted without all planning restrictions having been signed off.

WHAT WE DID

Our first challenge was to source a lender who would lend for a ‘multi unit freehold’ property. After that we needed to clarify the true size of the smaller unit and work with the client’s architect to get the remaining planning issues satisfied.

By working with the architect we could provide layout details and plan that satisfied the lender’s concerns over the layout of the property. We also used the gross income for five larger units to support the borrowing and got around the issue of one unit being too small. A mortgage of £940k was agreed and drawn in April 2020.

BACKGROUND

When the client’s main bank declined their application for a CBILS loan they thought that their only option was a Bounce Back loan and that they would have to manage on borrowing £50k when cash flow forecasts showed them needing £100k.

THE CHALLENGES

The client was advised that a Bounce Back loan prevented the business accessing any more borrowing on a Government scheme. They were also starting to delay supplier payments and making decisions about shedding staff and other costs. Time pressure was the overriding issue.

WHAT WE DID

We started by clarifying how the Government schemes worked. We explained that we could obtain more funding, we would just need to repay the Bounce Back loan as part of it.

We then approached a lender who we knew would give a same day answer. This meant we were able to provide a finance offer within 24 hours for the amount the client needed. This case was all about correcting misinformation and looking beyond the barriers to structure a solution that worked. This case completed in July 2020

BACKGROUND

This was a successful business that wanted to improve the structure and terms of their existing borrowing. The big issue for the client was not the cost of finance but that there were a number of personal guarantees in place which always caused disagreement during board meetings.

THE CHALLENGES

At a time of uncertainty it is usually the case that lenders increase their costs and demand more certainty of repayment from the borrower. It is also the case that simply wanting better terms on your borrowing is rarely attractive to a lender. Wanting to renegotiate borrowing usually raises the concerns of a lender and can lead to opening a can of worms best left closed.

WHAT WE DID

For some time we had worked with a couple of lenders on their CBILS proposals. Having this relationship was crucial in that it meant we could refer cases ahead of our peers and could structure borrowing in a way that other brokers couldn’t. We used the CBILS scheme to raise a loan of £154k.

This repaid the current borrowing and gave the client 12 months without needing to make any payments. Because the borrowing was below £250k on CBILS there were no personal guarantees required.

BACKGROUND

The client owned one office building and had purchased the adjacent property as it gave them a greater chance to develop both sites in the future and increased their ability to generate an income. At the time the purchase happened both units had tenants and a good demand for office space existed.

THE CHALLENGES

The overriding issue was that Covid-19 had taken many commercial mortgage lenders out of the market, leaving the client with high cost finance which was running out, they had no long term mortgage on the table and the tenants in one unit had given notice.

WHAT WE DID

This case was all about relationship. Being our relationship with the client and our relationship with the lender. We reviewed the figures are decided that by combining both properties and offering more security to the lender we could overcome some risk. We also liaised with local letting agents to build a justification that the property could be re-let fairly quickly.

By taking the lender’s concern, going the extra mile to give them comfort and providing a more considered and thoughtful proposal we secured commercial mortgage finance of £1.4m, this was completed in May 2020.

BACKGROUND

A trading business which had two outlets was approached by their landlord who wanted to sell the freehold to their shop due to pressures caused by Covid-19. The purchase price offered was fair and would allow the client to obtain an asset, obtain control of their premises and remove the pressure of an ever increasing quarterly rent.

THE CHALLENGES

The big challenge was that the current business was suffering due to Covid-19 and that the client needed to postpone any new loan repayments, in addition the client needed to reduce the costs of the new mortgage to ensure maximum cash was retained within the trading business.

WHAT WE DID

Using a specialist lender accredited to provide CBILS (Coronavirus business interruption loan scheme) finance as a commercial mortgage we obtained a finance offer using CBILS. This meant that there were no repayments on the mortgage in the first 12 months, in addition all loan costs are paid in this period which meant that the valuation, lender legal costs and arrangement fees were all paid for. The client had no outgoing for any of these costs.

Using CBILS for a commercial mortgage is not well known but the benefits can be significant. We advanced £200k with the case completing in August 2020.