Enness Global was approached by a returning client seeking additional finance for an established business. Having previously used Enness to arrange residential property finance, the client initially enquired about an unsecured business loan.
Following a review of the requirement, it became clear that the proposed unsecured facility was unlikely to be suitable. The client already had existing borrowing with the lender under consideration, and the lender was not prepared to extend the facility further. Rather than pursuing an unsuitable route, Enness reviewed the client’s wider assets to identify an alternative funding structure.
The client owned a commercial property that had been acquired several years earlier for approximately £1.2 million and was now valued at around £1.5 million. The property had relatively low existing leverage, creating an opportunity to raise additional capital against the available equity.
The client’s existing high-street lender was also unwilling to increase its exposure. Although the business had a long trading history and had historically performed well, it had recorded a loss in the most recent financial year following the loss of an NHS cleaning contract. This recent deterioration in profitability made a conventional increase in borrowing more difficult, despite the business’s established track record.
Enness therefore approached an alternative commercial lender with a broader view of the client’s circumstances and the strength of the underlying property security. The lender agreed to increase the existing mortgage from £700,000 to approximately £1 million, subject to lender criteria. Given the property’s increased value, the resulting loan-to-value remained relatively conservative.
The additional borrowing provided the client with access to the required capital while using an existing commercial asset rather than relying on unsecured borrowing. The lower gearing also supported the lender’s assessment of the overall proposition.
This case demonstrates the value of considering alternative funding structures when an initial finance route is unavailable. By reviewing the client’s wider asset position and identifying the available equity in an existing commercial property, Enness was able to restructure the requirement around a form of secured finance better aligned with the client’s circumstances.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, property suitability and lender criteria. Terms, rates and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Commercial property values can fall as well as rise, and borrowing against property carries risk.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
