£1.34m 2nd charge for business purposes, GU5
Client circumstances:
Our client owned a wholesale apparel business which had faced a financial setback due to the pandemic. As well as already having a business loan, they also had an £800,000 overdraft which was due to be repaid imminently. The client urgently needed £1.5m to repay the overdraft and purchase new season stock which would ensure cashflow into the business. They needed funds fast to avoid any financial penalties from their existing lender. Knowing that time was of the essence, their broker immediately contacted us.
MT Finance solution:
In order to provide the client with the funds they needed, we looked to secure a second charge bridging loan against their main property. However, an unexpected down valuation of the property to £6.5m meant that we could not raise the full £1.5m due to it now exceeding our maximum LTV for a second charge. To ensure the case could continue to progress, we sought to find a solution which would provide the client with the funds they needed for their business cash flow.
After working with the client and their broker, we proposed that we could lend up to £1.34m, which would still provide the client with the funds they needed. At 66.8% LTV, this was slightly above our maximum but, as with all our cases, we assessed it on its individual merits and the risks involved. As the client had a solid exit strategy in place – selling their property which they had already accepted an offer on – this gave us the confidence to issue a bridging loan with a higher LTV.
The Benefits:
By taking out a second charge bridging loan with us, the client was able to repay their overdraft and purchase new stock which will drive sales and provide cashflow into the business. Our willingness to be flexible and think outside the box allowed us to complete this second charge bridging loan before the client’s deadline, meaning they faced no financial penalties from their existing lender.
The 12-month term will give them time to complete the sale of their property, which will enable them to exit our bridging loan. If this happens in less than 12 months, the client won’t face any exit fees or early repayment charges.
