Securing £480,000 Property Refinance for a Manufacturer

We were recently asked for help by a company that has built a reputation in the UK  consumer electronics market. As an electronic goods wholesaler they operate warehouses in the UK, and a distribution operation that covers the country.

Their business is thriving, providing a range of TVs and related goods mainly for the discount retail sector. However, the partners realised that they had established a large market share  - but that it would be difficult to grow any larger with their present business model. 

“We import TVs from the far east - some of the brands may be unfamiliar, but we can offer them all to retailers at value for money prices. We have contacts across the trade and across the UK. what we needed was another way to use those contacts.”

Setting up a technology brand

Our client had already been speaking to manufacturers in China who produced the televisions he sold for other companies. He realised that he could increase his profits by selling televisions under his own name.

“We would be going to the same manufacturers that produced the TVs we already sold. They would simply put our name on them instead of the brands we were already distributing.” 

Setting up manufacturing with a new brand would mean a large order, and the client came to us with the need to fund production.  Funding a large import order can be challenging, as lenders will not lend on assets that are still outside the UK.

“We would need to pay for tooling and for the manufacturers minimum order. It meant that we needed to raise around £500,000.” 

The client could provide £20,000 investment from their own cash resources, and asked Rangewell’s experts for the most cost-effective solution to raise the rest. We found it from an unexpected source.

The client was in the process of buying a warehouse in Leicestershire, close to the M1, to act as a distribution hub. It was already subject to a commercial mortgage, but property prices in the area had increased, and we saw that we could refinance the premises and release substantial funding. 

How a refinance deal works

A Commercial Mortgage is a loan secured on your property. Because of this security, the risk to the lender is small,  and the interest rate they charge can be reduced. As a result, the costs of a Commercial Mortgage can be among the lowest cost lending that is commercially available.

It works by letting you take out a new Commercial Mortgage on your existing property. If you are refinancing an existing Commercial Mortgage, you can repay your original loan, and use any surplus cash to help build your business. If you already own the property outright, all the money you raise is yours to use in any way you wish.

Many commercial lenders will be able to provide property refinance, and will want to confirm the value of the business as well as of the property the loan will be secured on. This will mean balance sheets, statements showing profit and loss and cash flow data, and possibly details of plans for the future. 

They may also need to see details of the director's personal finances and will expect to see a good credit history.

They will also want to confirm the current value of the property to be refinanced: The condition and type of the premises will be important, as will the current market conditions. Versatile properties such as warehousing may be particularly attractive to some lenders.  

Could property refinance help your business plans? Find out more here.

How we helped

We saw that the property had an existing mortgage secured on it, but we believed that we could find a lender capable of setting up a better deal, which would release a substantial amount of cash.

We drew up a shortlist of lenders and discussed the rates and terms they would expect - and found that several would be able to offer the sum needed to let our client progress with their business development plans.

We set up a deal that offers an additional £480,000 for the client - and allowed them to raise the funds they needed at just 4% above base rate. 

At Rangewell, we can provide the specialist help you need - whether you are looking for property refinance or any other business finance solution

 Simply call us at Rangewell on 020 3637 4150 - or email  contact@Rangewell.com.