Property Development FAQs

Who can borrow?

We work with developers of all different sizes and  experience. Whether you are a first time developer or an experienced  player undertaking a large project – we can help find the right  solution.                

How much can you borrow?

This depends on the nature of the project, its  profitability and your background and experience. It will also depend on  your appetite for risk and how much you are willing to pay for funds.  We can structure deals – including subordinated debt – at up to 90% of  the total project costs and if you have other sources of asset security  this could even be as high as 100%.
 

We can also access funding on a joint venture basis when a developer has  no cash to put in but has a viable project and a strong track record –  where profits are shared with the finance provider.                

What interest rate will you pay?

This generally depends on the amount you wish to  borrow but rates can start from less than 6% per annum for lower risk  projects and will generally be related to the loan to value (LTV) of the  project. Our broad market access and relationships mean we can find  attractive financing for the right deals.                

What other costs are involved?

It is usually necessary for the property, the project  Gross Developed Value (GDV) and all development/construction costs to  be independently assessed prior to the loan facility being formally  approved. These valuations and professional services, as well as legal  costs are expenses of the borrower. If you are drawing down the loan in  several tranches (as the project develops) further valuation costs may  apply.                

How quickly can I raise funds?

Our lenders can provide decisions very quickly (often  in a day or two) so the valuation and other advisors usually drive the  timing. We can work with you to select the right advisers and to ensure  the lenders have everything they need to.                                 

Does it matter is there is already finance?

No – we work with lenders who will consider lending  on a second or even a third charge basis. What matters is the nature of  the project, the quality and value of the security and the LTV. Consent  will often be required from existing security holders.                        

Business and Commercial Mortgage FAQs

Who can get a Commercial Mortgage?

We work with existing businesses as well as those  looking to start out. Audited accounts or a previous trading history are  not always necessary as lending decisions can be made against the value  of property and your ability to repay the loan from business income or  rental income.
 

Previous credit problems will also not necessarily prevent you obtaining  funding as there are lenders in the market who will help (although not  all so it’s important we know about any history up front so we can guide  you in the right direction).                

How much can you borrow?

Typically we are able to arrange a commercial  mortgage up to 80% of the 'bricks and mortar' value of the property or  75% of the business purchase price (including goodwill) if you are  taking over a going concern. We have strategic partnerships with lenders  who will, in certain circumstances, offer a commercial mortgage up to  100% funding if additional security is made available. These levels vary  over time so please get in touch to discuss current market conditions.
 

We can also often help you to secure additional top up and bridging  finance for the purchase if necessary and have special deals available  of up to 95% funding for sitting tenants wishing to buy the business or  Commercial Property they are currently successfully renting.                

What interest rate will you pay?

The interest rate and terms offered generally depend  on the amount you wish to borrow as a percentage of the purchase price,  the term of the loan and your previous credit history. We have access to  the most competitive financing solutions in the market and interest  rates currently start at around 2% above bank base rate.                

Why Use a Commercial Mortgage Broker?

A Commercial Mortgage is a very specialised product  and the majority of lenders will only work via qualified and accredited  Commercial Mortgage Brokers. We will consider your borrowing  requirements and match those requirements to the panel of lenders we  work with.
We’ll manage every step of the process to optimise the outcome and minimise the time and effort from you.                

Do you charge fees?

We do not typically charge up-front fees for  commercial mortgages. We take a fee from the borrower for making the  introduction. There may be a fee for more complex arrangements such as  business purchase.                       

How quickly can I get a decision?

We can usually provide a minimum of three proposals  within hours and a decision in principal will usually be available  within a business day – giving you confidence to proceed.                

Bridging Finance FAQs

How does bridging finance work?

Short-term loans or 'Bridging finance' is typically  secured on either a first or second charge basis on an asset with a  readily realisable value.
This may be: 

  • freehold or long leasehold property
  • Land and development sites
  • Other assets such as jewellery, cars, art etc.

How much can I borrow?

We can arrange finance for anything from £10,000 to £25 million.                

How quickly can I obtain the funds?

It depends on the complexity but funds could be in  your bank account in 48 hours or less if other professionals (such as  valuers can be lined up).                

How much will it cost?

Set up fees will generally be 1-3% of the loan amount  and interest rates typically range from 6-18% depending on the asset  type, your credit history and so on. Rates have been improving over time  as the market becomes more competitive so please get in touch to  discuss the best terms available.                

Do you arrange interest only loans?

Yes – interest only loans are available                

Can I roll-up the interest?

Yes – we can access facilities where the interest is rolled up and paid at the end of the loan                

What is the different between Open and Closed Bridging Finance?

An 'open' bridging loan is a loan where the exit or  repayment method is known but not yet fully formalised (e.g. the sale of  a property which is currently being marketed). A 'closed' bridging loan  is a loan where the exit or repayment method is fully finalised (e.g.  the sale of a property where an exchange of contracts has taken place).                

Asset Backed Lending FAQs

How do leases work?

Leases vary but typically fit into two categories: 

  1. Direct Lease. You identify the asset (and sometimes negotiate the  price) and arrange for the leasing company to buy it from the  manufacturer (if new) or the previous owner (if used) and the leasing  company rents it to you.
  2. Sale-and-leaseback (also called purchase leaseback). You sell an  asset you already own to the leasing company for fair market value or  book written down value and then lease it back.

In both cases, the lessor owns the asset, and rents it to you. As with  any other rental agreement, you return the asset at the end of the lease  (some leases grant you an end-of-lease option to renew the lease or to  sell the asset to a third party as agent of the lessor).                

What different types of asset finance are available?

There are three major types of leasing: finance  leasing, operating leasing and contract hire. Whilst not strictly a type  of leasing, hire purchase has similar characteristics: 

  • Finance Lease (Full Payout Lease). You effectively  acquire all financial benefits and risks of the asset without actually  acquiring legal title. The leasing rate is set to collect the full value  of the asset plus the finance charges over the contract duration. At  the end of the lease either: the asset is sold to a third party (and you  typically share in the proceeds); you extend the lease (often at very  low rate as the residual value is likely to be minimal) or you acquire  the asset from the leasing company at a market or a pre-agreed price
  • Operating Lease. Often with a shorter time frame  than financial leasing (usually significantly shorter than the working  life of the asset), operating leasing is more like regular rental. After  the lease has expired - the lessor expects to be able to either sell  the asset in the second-hand market or to lease it again and will  therefore not need to recover the total asset value through lease  payments. There may be an option to extend the leasing period at the end  of the contract.
  • Contract Hire. A form of operating lease (often  used with cars and other vehicles) that includes a number of additional  services such as maintenance, management or replacement if asset is in  repair.
  • Hire Purchase. This is an agreement for the hiring  of an asset with an option to purchase. The legal title will pass to  you when all payments have been made. The term of a hire purchase must  be significantly shorter than the working life of the asset and may  include a final payment to reduce monthly payments.

Why consider leasing?

 

  • Improved cash flow. Leasing gives you access to the asset with  minimal up-front payments – allowing you to pay for the asset with the  income it generates.
  • Flexible time frames. Leasing contracts can be structured to fit  your requirements. Use an asset for as long as you need it without  owning it forever.
  • Simplified cash flow management. Lease payments are usually flat,  making cash management more predictable and easier than with a variable  rate loan. The fixed interest rate of a lease also helps if interest  rates rise.
  • Hedge against obsolescence. Depending on your end-of-lease option  you may be able to simply return the asset to the lessor. You will not  have the hassle of selling the used asset or run the risks related to  residual value and obsolescence.
  • No debt. An operating lease is generally not classified as debt on your balance sheet.
  • Tax. Operating lease payments may be tax deductible and hire  purchase agreements may allow the lessee to claim capital allowances.  Professional advice should be sought before relying on this.
  • Additional advantages. Some leases offer additional advantages such as cancellation options or asset maintenance.

What kind of equipment can be leased?

You can lease most types of durable assets, from equipment valued at a few thousand pounds to assets worth millions.  

How long to leases last?

One of the advantages of leasing is that you can set the duration to suit your business needs – from a few months to many years.                

Cash Flow Lending FAQs

How does Factoring work?

When you issue an invoice – rather than waiting for it  to be paid – you can ‘factor’ it. Your factor partner typically pays  you 80-90% of the invoice value straight away (although in some  industries it will be lower) – regardless of when your customer actually  pays. The factor takes over responsibility for the administration and  collection of the invoice – saving you administrative time and money.  Your customer pays them directly and once they have the factor repays  you the balance, less any fees due.
 

Whilst factoring is quite common we can also offer Confidential  Factoring – where you customer never knows that you have factored their  debt if you prefer.                

What is the difference between factoring and invoice discounting?

 The principle is very similar. However – with invoice  discounting you retain control of the payment collection process and  your customer never knows that it has taken place.                

How much does it cost?

Historically there were two costs – a service cost  that depends on your size and number of customers (typically 0.25-3.0%  annual turnover) and an interest rate, usually charged on a daily basis.  However – some lenders now offer the flexibility to just ‘pay as you  go’. Rates vary depending on credit quality of your business, credit  quality of your customers and whether you want to insure the credit  losses. We can assess the best option for your business.                

How flexible is factoring or invoice discounting?

Very. You can choose to factor your whole book or  choose which invoices you want to submit and when – all typically  handled via an online portal. This can be particularly helpful for  businesses with marked seasonality in their cash and sales cycle.                

What happens if my customer doesn’t pay?

It depends which option you choose. With recourse  factoring – you retain the risk of the customer not paying. If you opt  for non-recourse, the factor still pays you even if your customer  doesn’t pay them. There is a charge for this credit insurance.                

How to choose the right factoring company?

    

  • Aside from the obvious considerations of rate and fees - given the  nature of factoring there are some other issues to consider including:
  • Reputation. The factoring company will be interacting with your  customers to collect payment. You should work only with a reputable firm  to reduce the risk of negatively influencing your customer  relationship. We work with all the major factoring organisations and  will recommend the one that is best suited to your business. All our  partners are members of the Factors and Discounters Association.
  • Service levels – how easy is it to submit invoices and how quickly are they paid.
  • Exports factoring capability. If you export it is essential the  factor has its own network, or affiliate partners, in your customers’  country to provide on the spot collection.
  • Bad debt protection – Not all factors offer the ability to insure against bad debts.
  • Sector expertise – make sure your factor company understands your business and your industry

Business Term Loan FAQ's

How much can I borrow?

We can provide access to loans from £20,000 to £20 million depending on the size of the business and security package available.                

How much does it cost?

Rates vary significantly depending on many factors  and our role is to make sure the lender fully understands your business  so they can offer you the most competitive rate. Rates are becoming  increasingly competitive so finding the right solution can save you  significant amounts of interest costs.                

Who is eligible?

This varies by lender, but we can work with most  businesses in most sectors. Whilst most lenders will prefer a business  with a long track record – we can access funding for start-up business  and those where the directors have had previous credit issues. From our  panel of over 270 lenders – if financing is available – we should be  able to find it! 

What is a personal guarantee?

This varies by lender, but we can work with most  businesses in most sectors. Whilst most lenders will prefer a business  with a long track record – we can access funding for start-up business  and those where the directors have had previous credit issues. From our  panel of over 270 lenders – if financing is available – we should be  able to find it!