How we arranged a Commercial Mortgage to buy a nightclub - fastPublished on 11th October 2019 2019-10-11T11:00:00+00:00 - Last update on 14th October 2019 2019-10-14T15:56:08+00:00
The way to find large-scale finance – fast
The nightclub sector has become a multi-million-pound industry. Some of the major dance-music superclubs with big reputations and serious followings compete nationally, as clubbers are willing to travel across the country to attend them for top party nights and sets from world-renown DJs. Some of these clubs can accommodate thousands of customers a night, and generate huge profits from entry fees as well as drink sales.
There are a handful of really popular clubs that can generate a turnover of £100,000 plus per night on Fridays and Saturdays - leading to very attractive profits for their owners.
As a result of this profitability, on the rare occasion that a really successful nightclub changes hands, very large sums can be involved.
At Rangewell we recently provided £2,000,000 worth of funding to support a club owner in buying a second major nightclub. But we did not just work to find a lender who could offer the scale of funding required - we used our expertise to help the owner move fast enough to secure the deal.
The club – situated in an Essex commuter town - has built a national reputation, having been open for more than 20 years and attracting customers, not just from the local areas and around the M25 – but coach parties from as far away as Manchester too.
The owner had built the business up from its launch but felt that the time had come to concentrate on his other business interests.
He valued the business at £3,200,000 – and had found a buyer prepared to offer the asking price. However, this buyer was having difficulty raising the funding required.
At Rangewell, we were approached by another London nightclub owner whose club had reached capacity – and who saw the potential in the Essex venue as an extension to his own business. He was prepared to offer an additional £100,000 in order to secure the club.
Naturally, the owner was happy to accept the counteroffer – but he wanted to release funds as soon as possible to support a property development project he was involved in. He would only accept the new offer if the London club owner could provide the funds before the first potential buyer could make good on his offer.
The client turned to Rangewell to help raise the funds. We knew that he would be able to contribute a large cash sum - but would still need to raise £2,000,000, and ideally, in a matter of days.
His bank would take three weeks to provide the funds required – and the owner was only willing to sell to the first buyer with the funds.
We knew that we would have to work fast, and contacted our client's bank. They were happy to provide an approval in principle – but their procedures could not be hurried along, and would take at least fifteen working days – if everything went smoothly.
A fast solution to beat the competition
Fortunately, we were able to use our network of contacts to find a private lender who was able to advance the necessary funds as a Bridging Loan secured on the nightclub premises – and with the confidence of having a loan in principle agreed by a high street bank as an exit strategy. Costs were relatively high but, with our support, the lender was able to conduct the necessary due diligence in a matter of days – successfully securing the deal.
This type of finance is called a Bridging Loan because it is designed to bridge a short-term funding gap. Bridging Loans are short-term loans secured on property and are usually repaid quickly, either by the sale of the property or by another, more economical finance product designed for the long-term, such as a mortgage.
Bridging Loans can often be used to fund business and property purchases, but there is no restriction on how funds can be used. So if you are faced with a sudden expense - or if you need finance to take advantage of an opportunity - a Bridging Loan secured on a property you already own could provide the answer - and quickly.
The loan can be as short as one day and run up to a maximum of 12 months. Loan amounts start at around £25,000, and there is no maximum.
Our client took over the nightclub, which stayed open, and replaced his Bridging Loan on schedule as soon as the funds were ready from his bank.
Do you need large scale finance – and do you need it fast? Simply call us at Rangewell on 020 3637 4150 - or email [email protected] and speak to one of our Business Funding Experts to see if we can do the same for you. Our service is free.
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