Commercial Mortgage Case Study

A businesswoman who owned a small portfolio of commercial properties.
Commercial Mortgages Case Study

The Business

Our client, in this instance, was a businesswoman who owned a small portfolio of commercial properties. Through her company, she borrowed £700,000 from a well-known high street bank to carry out some refurbishment. The property purchased for £1.2 million and was now valued at £2.5 million.

The Challenge – Repaying a Commercial Loan

Problems with an existing bank relationship can arise when a customer, such as our client, is asked to repay a large commercial development loan. Only by coming to BFS were they able to find a solution from looking at the whole of the market.

Banks can sometimes have a preference for different types of lending so it can pay to research when dealing with large commercial mortgage loans

As this was a short-term commercial loan, the bank’s corporate banking division wanted the money repaid and directed the client to back to her bank to arrange longer-term finance. However, the private bank would offer only £300,000 on a 5-year term and were asking for a personal cash injection. The client did not have the ability to do this, nor did she have any other cash. Most of her wealth was tied up in a portfolio of properties which she did not wish to liquidate.

The BFS Solution

The team at BFS met and spoke with the client, and quickly unearthed some other added complications. Although the client’s company had made a profit in the last tax year, some other losses had been made in previous tax years, which consequently led to several banks declining the loan on grounds of affordability.

BFS paired one of their preferred commercial lenders to take up the case where it was soon apparent that the losses were due to a combination of depreciation and amortisation expenses – in other words, non-cash entries.

The chosen commercial mortgage lender then positioned the client with a lender who understood the client’s sector and was also understanding of the mitigating circumstances. A suitable lending deal was packaged, and the client received her loan.

The Result

The client has been able to continue her development and has already voiced her appreciation of our skill and ability to think outside of the box by placing her with the right lender. BFS would always hope to tackle this and other more complex cases when put to the test.

We Can Help You

If you’ve tried the banks and traditional avenues for funding your business with no success, we can help. Contact us and we can give you all the information you need to secure funding. Call us now on 0121 725 0099.

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