A business owner approached Enness seeking finance to support the expansion of an established company in the North East of England. The client owned an unencumbered industrial site and wanted to release equity from the property to acquire an adjoining site and expand the business.
The adjoining industrial site was available for approximately £700,000, with the client seeking around £500,000 of commercial finance to support the acquisition.
The client’s priority was to structure the borrowing in a way that protected business cash flow during the initial stages of the expansion. An interest-only period was therefore preferred at the beginning of the facility, allowing the business to manage its existing commitments while integrating the additional property into its operations.
Enness approached a high-street commercial lender able to consider the client’s circumstances and the proposed use of the additional property. The lender agreed to a capital repayment holiday at the start of the loan term, subject to its lending criteria, providing the business with greater flexibility during the initial period of the expansion.
The resulting facility provided approximately £500,000 of finance secured against the client’s existing commercial property. The structure incorporated an initial two-year interest-only period, followed by capital repayment over the remaining term, subject to the agreed lender terms.
The financing enabled the client to proceed with the acquisition of the adjoining industrial site while maintaining greater control over business cash flow during the initial phase of the expansion.
This case demonstrates how commercial property finance can be structured around the cash-flow requirements of an established business. Where a business owner has significant property equity but wishes to avoid placing unnecessary pressure on working capital, an appropriately structured facility may provide greater flexibility, subject to lender criteria and the individual circumstances of the transaction.
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, affordability and lender criteria. Terms, rates, repayment structures and availability may vary depending on individual circumstances.
Risk Warning:
Where borrowing is secured against commercial or other property, failure to meet repayment obligations may result in the secured property being repossessed. Commercial property values can fall as well as rise.
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.
