We are witnessing a significant rise in the incidence of some banks refusal to offer new or extended terms to commercial loan facilities. In extreme cases, some banks are demanding early loan redemption. This often leaves the borrower with a major headache in a market where commercial lending is restricted and competitive alternatives are not immediately apparent.

There is no doubt that some banks are ‘shoring up’ their liquidity positions by not lending as broadly as they have done in the past. However, some lenders are very much in the market and the skill is to source those lenders who have an appetite to lend. It is key to present a proposition in a robust manner and, importantly, directing the proposal to the underwriters making the decisions, rather than the local manager who probably has no discretion in these matters.

If you are looking to renew existing finance, raise capital or purchase new premises, putting together an application which will address the necessary requirements of that individual lender is crucial in obtaining the loan facility you need. It is also important to consider on longer term loans to fix or part fix deals to hedge against interest rate shocks.

With the assistance of Brooklands Commercial Finance, a leading commercial finance brokers and NACFB member firm, I have put together some examples of deals completed recently to give you an idea of what is currently available in the market.

Commercial Loans

£1.6 million investment refinancing deal.

• 65% Loan To Value
• Part fixed rate/part variable rate
• Interest rate payable 3.5% above Bank Base Rate
• Lender’s arrangement Fee 1.25% of the loan amount
• 15 year term

£1.2 million purchase, investment commercial loan.

• 65% Loan To Value
• Interest rate payable 3.3% above Bank Base Rate
• Lender’s arrangement Fee 1.5% of the loan amount
• 15 year term

Development Finance

Recent residential development cases include:-

• £500k draw down facility on £1m GDV (Gross Development Value) with a max loan 50% of the purchase price and 100% of the build costs
• 6.99% per annum (no minimum term and no early repayment charges)
• No Exit Fees
• 2% of the loan amount Lenders arrangement fee

And

• £1million draw down facility on £2.2million Gross Development Value (max loan 50% of the purchase price and 50% of the build costs)
• Interest rate payable 4% over Bank base rate per annum (no minimum term and no early repayment charges)
• 0.75% Exit Fee (calculated on loan amount not GDV)
• 1.5% of the loan amount Lenders arrangement fee

Bridging loans are also still widely available up to 65% Gross Development Value (the final finished value of the project) for major conversion work through to light refurbishment.

If you do require assistance with a commercial loan or development loan you can use the contact forms below and we will do our very best to help.

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