Case study: a funding solution for the hotel industry

The lockdown has been a disaster for many business sectors - but hotels have faced particular problems, as they were closed for months - and found few guests even when the lockdown was relaxed.

At Rangewell, we are working to find solutions for hotels that have run into problems because of the lockdown - and when we were approached by the owner of a well-known London hotel we were ready to help.

Our client owned a well-known boutique hotel in the West End of London. He needed to refinance a loan that had expired with his high-street bank and also required additional funding in order to refurbish and upgrade the building during the lockdown.

This would allow the borrower to implement a number of Covid-compliant changes, such as implementing a one-way system to make it safer for guests to move around the hotel, and a new pre-packed breakfast service to minimise guest interaction and ensure that any food preparation risk could be minimised.

“Usually, we would have a steady summer season, with business travellers making up the most of the bookings the rest of the year. This year there was the lockdown and holiday travellers were few and far between - and business travellers were not coming in at all.” 

With the commercial mortgage to pay, along with other overheads, the client had applied to his bank for CBILS funding but found that they were not prepared to help. His own credit history was not good and lenders were pessimistic about the outlook for the hotel sector.

He turned to us at Rangewell for help. 

Finding the most appropriate solution to the client's challenge

We looked carefully at the business and saw that CBILS would be the most appropriate type of funding for our client's needs. This type of lending is underwritten by the government - but it is provided by commercial lenders, and borrowers must meet their usual criteria. It was clear that our client would have difficulties securing it in the current climate because of the sums involved.

The client needed £1.5m to refinance the existing debt and £300,000 to pay for the refurbishment of the property - a total of £1.8 million.

We put our unrivalled combination of facilities, skills and network of contacts to work.

Rangewell can secure funding for lenders across the entire lending market. We can also use some sophisticated software to identify the most appropriate source of funding. In this case, our Rapid Algorithmic Matching Platform (RAMP) technology quickly identified a list of 17 lenders that were willing to provide finance to the borrower.

Our fintech platform system streamlines the entire process of finding and securing the most appropriate source of funding for every client. First, it generates a digital fact-find which means we can sense-check their proposals quickly and efficiently.  

Then, it allows us to shortlist appropriate lenders - the size of the loan, the sector and the credit status of each client will have a big part to play in determining the lenders who are most likely to be receptive to an application.

Once we have our shortlist and approached our contacts at the chosen lenders, having the data and documentation updated in real-time and easily accessible throughout the underwriting and due diligence sped up the process of completing and drawing down the loan.

Vinod Sherigar, director of funding at Rangewell, narrowed the selection down to six lenders, including three that were willing to offer 12-month CBILS loans.

Vinod explained: "We found a lender with a long-standing reputation for having in-depth knowledge of the hospitality and leisure sector.  They were keen to work with the Rangewell system, with its immediate access to data such as on-balance sheet funds, and get support from our technical and legal expertise, as this was a complex transaction.

From the first point of contact with the borrower, Rangewell’s APIs into Companies House and the Credit Agencies, as well as its automated fact-find technology, provided clear insight into the client and their requirements. 

We also used the Rangewell online data and documentation portal to collate, share and update documentation and outstanding issues to reduce the friction and delays common in complex property transactions."

The funding Rangewell secured

The loan was agreed on a two-year term and all the interest costs for the first 12 months, as well as all valuation arrangement and legal fees, were paid for by the government-backed CBILS funding scheme.

£1,800,000 interest-free for 12 months

It meant that our client could avoid the immediate financial problems facing his business, and start preparing for reopening as the restrictions are lifted, with a refurbished interior designed to be Covid-safe.

Why Rangewell?

Rangewells unique technology and automation played a major part in the ability to close the transaction on time, despite the slowdown caused by the Christmas period on top of the extra challenges of lockdown and all parties working remotely.

Vinod added: “We actually transacted on seven deals during the Christmas period, but the way that technology made the due diligence and completion process almost seamless in a complex property refinancing should provide great encouragement to the whole industry that technology and automation really will allow complex deals to continue to draw down in what looks like will be a challenging 2021.”

Our expertise in the hospitality sector was a major factor in getting this loan arranged quickly - despite the tight time constraints. But whatever business sector you work in, Covid will mean new financial challenges - and those challenges may not be over yet.

Our Business Funding Experts will be able to discuss the options, and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business conditions are presenting you with.

We are independent, and we know the entire lending market. That means we can take a view that will put your interests first - and if you have not been successful because of your bank’s lending policies, we will work to find one that is more sympathetic.

At Rangewell, we can help you arrange all types of business funding - including CBILS arrangements - but also include property funding with commercial mortgages and asset funding. Call us if you face a funding challenge - we can help you find the answers.