Securing £130,000 Property Finance for a Property Developer

Covid has disrupted every business sector. Even businesses involved in property development suffered when lockdown meant that deals could not be progressed and building and refurbishment work could not be done.

But the government’s provision of funding has provided a lifeline for many businesses - including property developers.

We were recently approached by a developer working in the west country, who had arranged to buy a large property which would be ideal for conversion into three flats.

However, his offer had been based on a cash purchase - which meant that he would have to move quickly to provide the necessary funds.

His usual bank, which had helped him with similar deals in the past was moving very slowly because of lockdown, and he was becoming worried that the deal would fall through.

He called our property team for help.

“I needed to buy a £200,000 property - and I could only call on £70,000 of my own. I needed to raise £130,000 and because of the state of the property, a mortgage would have been out of the question - even if lenders had been lending.”

We looked at his figures and proposal, and saw a way to structure a deal which would let him complete on the property.

The deal was based on a bridging loan. 

About bridging loans

Bridging Loans are  secured on property like a mortgage - but unlike a mortgage they are designed for short term use.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. Bridging Loans can be arranged within a matter of hours, and funds released in as little as 72 hours, under certain conditions.

We know that although mortgage lenders were not lending because of Covid, those who provide Bridging loans were still lending. We contacted those that we knew about our clients needs, and were able to secure some offers in a matter of hours.

The most attractive offer would provide £130,000 at 0.7% per month, with all interest payment to be rolled up - meaning that there would be no money for our client to find until the property was completed and sold.

But we were able to do more.

Because our client was a developer who operated a business, he was eligible for a bounceback loan. We applied for the maximum £50,000 bounceback funding , which could be used to fund the deposit and the work on the property - and paid back without penalty if the work could be completed in under 12 months.

About Bounceback funding

The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance more quickly during the coronavirus outbreak.The scheme helps small and medium-sized businesses borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

“Rangewell found me the cash I needed to buy and do the work on my property, at a time when banks and other lenders all seemed to have shut their doors. I was able to move ahead with the deal thanks to the expertise of the Rangewell team.

It mean I would pay nothing for the finance I needed for 12 months - by which time the property should be sold and the profits secured

Large scale property funding - fast

Bridging loan.  £150,000 at 0,7% per month - all interest to be rolled up and payment to be made in 12 months time

Bounce Back loan £50,000 at 2.5%, with 12 months initial repayment freeze

The client had the funding he needed for the project - with nothing to pay back for 12 months

 

Ready to find the answers to your property funding needs? Contact the Rangewell funding hotline on 020 3318 2613

 

 

Rangewell finds the financial solutions that your business needs

The Rangewell service is easy to use - and lets you talk to a funding expert to get a solution that is planned around your business needs.

Just call us and one of 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 plans present.

It can be a lifeline for your business.

We’ll search the entire lending market to find the most affordable solutions to your funding needs - and in most cases, our services are absolutely free.

 

To find out more call Rangewell for an informal discussion on  020 3318 2613 or email contact@rangewell.com

Keeping your business afloat with help from Rangewell

• Individual arrangements tailored to your circumstances

• Adverse Credit – no problem

• Repayments geared to your turnover

• Expertise in funding for your sector

• Bounceback and CBILS expertise

Talk to Rangewell – the business finance experts