Business Loans & commercial finance case study

Business Loans & commercial finance

If you have clients who are self-employed/business owners and who find it difficult to raise cash, you may find this case study helpful.

Background
Our client’s previous business suffered a period of poor trading and two investors withdrew support and asked for their investment back. The bank refused support.
In an effort to prop up the cash flow, our clients used personal borrowing but ultimately the business entered administration leaving them with a £40K CCJ, numerous defaults and 8 months mortgage arrears. They were able to start a new Limited Company which could trade profitably but the new company has no accounts and only 4 months records.

The Problem
There was bank debt in excess of £100K secured on the commercial premises (owned personally by our clients) plus a large second charge on our client’s home. The terms of the bank loans had been breached and the bank was insisting on a substantial repayment otherwise full payment would be demanded which could force a sale or repossession. Our clients also had an opportunity to purchase additional business premises and assets which were already generating cash and would allow them to expand and make significantly higher profits.

Whilst they had equity in their main residence, our introducer found that the combination of a failed company, high personal adverse credit and no accounts for the new business meant neither the bank or mainstream lenders would help.

The Solution
Promise initially looked at a bridging loan but there was no viable exit as the borrowers didn’t want to sell any properties and there was no chance of a remortgage due to the bad credit. Instead, Promise offered a £200,000 capital and repayment business loan secured as a second chargeon the borrowers residence to pay off the banks existing charge, reduce the bank’s exposure on the commercial property and purchase the additional premises. This would keep the bank at bay and allow the business to grow. The lender accepted the previous business problems, the personal bad credit of the business owners and the mortgage arrears. The affordability assessment was made based on projected income of the business. Without this loan, our clients could have lost their business, their home or both.

For more options for your clients, who own a business, call Promise on 01902 585052 or apply online

www.promisemoney.co.uk

01902 585052