Commercial Finance

Sometimes the finance available in the lending market is not sufficient and there may be instances when an investor is required to provide a capital injection into a business or a project in order for it to progress. This may be classed as more of an equity investment than a joint venture.

We work with a range of investors that are involved in business and property, many are looking to invest in companies or individual opportunities where providing risk capital means they can achieve a greater return or a profit share.

Senior debt is used to acquire a property or development site and can also provide the development cost. It is classed as “Senior” debt as the lender takes a first legal charge over the property.

Usually senior lenders provide a level of funding that will require the borrower to inject a reasonable level of equity to give the lender a lower risk. Typically this type of funding provides a maximum of 50-60% of the total cost and the borrower is expected to put their equity into the land purchase. If the loan is for a development, the bank will fund all of the construction and finance cost and the remainder of the facility can be utilised towards the purchase price.

Bridging finance is usually required as a short-term solution when borrowers are looking for a quick purchase or they would like to purchase a site to enhance planning and then either sell or develop the project.

There are a wide variety of lenders offering bridge loans, some will lend on existing assets such as residential or commercial properties which have an existing use value, others will be more flexible and lend on development land. Typically borrowers can achieve up to 50-60% of the property cost or value and usually whichever is the lower however, in certain circumstances there are exceptions to achieve higher gearing.

We can also assist with a range of other finance requirements that are not necessarily related to property transactions such as;

– VAT Loans
– Invoice Factoring
– Asset Finance
– Business Loans

If you require any of the above or another form of finance, please contact us to discuss your requirement and we will either source your funding or have one of our partners assist.

A lot of property developers are restricted on the number or scale of projects by the level of company cashflow. However, there are options available to help you grow your business.

We have sourced and structured development funding of up to 100% of cost through a range of contacts, each of them has a difference in structure but essentially the result is the same. Developers can complete an additional project with little or no equity input by completing the project in a Joint Venture with another party and then sharing the profits.

Usually the funder will provide the finance and the developer provides the opportunity and the expertise. For the most part, the funder is a silent partner and will just require regular reports on progress whilst the developer is allowed to construct and sell the development as normal.

On some occasions the Senior Loan does not provide the required amount to complete your project. In this case a Mezzanine loan can be used to complete the full requirement.

Mezzanine loans are sometimes known as “Junior Debt” because they are facilities that are used to top up the senior loan which holds a first legal charge. The junior loan will hold a second legal charge and rank behind the senior lender in repayment and other rights.

Typically mezzanine loans will take the total facility up to 70-80% of the cost and therefore it provides valuable capital to reduce a borrowers required equity. Mezzanine loans are perceived to carry more risk due to the higher level of gearing and its junior ranking and this will carry a higher cost than the senior loan.

Borrowers seeking investment loans are usually either going to be an owner-occupier or an investor looking to let the property. The commercial investment loans that can be secured will vary depending on which category.

Owner-occupiers will service the loan repayments from the profits of their business and this means that lenders will need to complete due diligence on the business and its trading history. Lending facilities can still be obtained if it is a new business although this may be at lower levels of gearing and will be achieved only with a strong business plan and team in place.