Attention SME & Family Business Owners.

Unsecured Business Finance is quick and easy to obtain.

Business loans have historically offered a time-consuming approval process that detracts your attention from focused day-to-day operation of the business.  Quite often this is at a time when you need to have a keen eye on the cash-flow, not on form filling or the banks traditional application process.  From speaking with other like-minded borrowers, it’s likely that the need for a short term unsecured facility is to plug a specific gap.  This may be due to an unforeseen problem or event which requires your full and undivided attention.

It’s clear that due to recent climatic events in the global economy, retail banks and other traditional lenders have become more cautious in regard to lending to SME and owned managed businesses.  Feedback suggests it is becoming more difficult to obtain even a small business loan or overdrafts.  Banks can often request a higher level of personal security to support their loan advances before they are willing to transfer funds.  This results in fast, short term lending being more difficult to find. 

New to market platforms are the enablers for peer-to-peer lending, allowing new forms and sources of capital to reach the markets at an astonishing pace.  This, coupled with new streamlined underwriting process and pricing structures can all add up to be an attractive alternative for the SME business owner and their borrowing options.

Terms vary from funder to funder but generally borrowers, businesses owners and their Directors can tap into facilities from £1,000 to £1,000,000 with the higher loan amounts coming under greater scrutiny than the lower levels, as you would expect.

The funds can be used for a few days up to 2 years and drawdown of funds can happen in a few days’ subject to the provision of the correct supporting information.  The process is all actioned online via a secure web portal and each loan offer is bespoke to the business making the application.

While these solutions are flexible and affordable they do come with some conditions; the business must have a trading history of 6 months plus which can be evidenced, the maximum funding is based on 2 months’ revenue.  If you have a poor personal credit score it may be possible to borrow, every application is considered on its own merits.  

The application process will involve basic information about the Directors, Shareholders and will be supported by a joint and several personal guarantee which will remain in-force until the loan has been repaid.  We can offer personal guarantee insurance to mitigate your personal risk. All lenders will require your latest accounts, your most recent management accounts and business bank statements for the most recent 3-6 months of trading.

Keen to find out more?  Give our team a call on 0131 564 0172 and we can direct you to the funding solution that is appropriate for your business.     

Mark Reidy

Director

mark@conduitfinance.com

0131 564 0172

Restructuring, Its emotional.

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Success Breeds Success

After completing a deal for a client we were grateful to receive an introduction to one of their friends, a real endorsement of having done a good job previously. 

The new borrower needed finance to permit the refurbishment of a residential property that had suffered fire damage. As a professional landlord, borrowing in his sole name, the borrower had built a high yielding portfolio of residential investment properties so location and asset quality were a challenge for most lenders. 

Securing competitively priced finance was difficult and the lenders the borrower had approached were unwilling to lend to the asset in its current condition. Being able to help clients add value to properties by securing flexible finance is something we enjoy. 

The buy to let landlord had bought the property cash at auction and quickly needed finance to ensure the property became revenue generative quickly. Within a week of being engaged we had credit backed terms for the loan and had progressed to valuation stage. 

We completed a whole of market search and recommended a ‘new to Scotland lender’ who were able to quickly grasp the transaction. We were able to prove the lenders appetite for this transaction by cross checking with heads of terms from another recent completion with this lender. By negotiating hard for the borrower we managed to secure an interest rate and arrangement fee much better than the market rate quoted by this lender. This reduction in cost more than covered our fee. 

Brokering the transaction at Conduit Finance, Edward Page said; “It was a pleasure to assist this client and advise on the best funding option.  I worked closely with the client to drive the process forward and arrange all supporting documentation, the valuation and legals. All parties were delighted to complete the process quickly to ensure the client was on site promptly.” 

We have been engaged to source and deliver the long term buy to let finance which, with interest rates an all-time low, will be on competitive terms.

Conduit Finance is from the outset, focused on providing a clear process, transparency of information flow and fees charged which leads to reduced deliverability risk and high levels of borrower satisfaction. 

Get in touch with a member of the team to access the best cost of finance from new and established lenders:

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com
Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com
Edward Page | Loans under £1m | Edward@ConduitFinance.com 
Sean Crombie | Business Development | Sean@ConduitFinance.com
Mark Reidy | Business Development | Mark@ConduitFinance.com

Don’t let personal recourse catch you out

Prior to the global financial crisis, access to funding was relatively straight forward.  Banks and specialist lenders would lend in most cases with light due diligence.

Following this downturn, banks have spent years trying to exit residential and commercial real estate transactions, with a glut of non-performing loans being sold onto specialist loan servicing funds to recover the debt.  

As a result of this we have seen a seismic shift in the care and attention taken by borrowers when taking on fresh debt or restructuring.  Many have had their fingers burnt, or know of someone local to them who has, with the ultimate backstop being the Personal Guarantee they signed.  

I expect many didn’t appreciate the extent to which this would impact their personal situation, long after the restructure or Administration.  

Borrowers now seem much clearer, and focused, on the personal recourse being requested from new funders.  In the boom years borrowers would simply sign the documents so they could get on with the project in hand, without giving too much thought or attention to the potential recourse. 

Most guarantees were via joint and several liability of the individual Directors of the business.

A Personal Guarantee is a written, legal promise from an individual to repay any shortfall on a specific loan or account which cannot be met by the principle debtor, normally the Single Purpose Vehicle (SPV) or trading business.  As mentioned above, most guarantees require joint and several liabilities, meaning that each individual who signs a guarantee can be held responsible for the whole amount of the debt.  

Personal Guarantees aren’t always standard, but can be negotiated to a certain point.  However your willingness to sign a personal guarantee reflects your commitment to the success of the business or transaction, by putting your personal assets at risk.  When a Personal Guarantee is signed, the signatory becomes personally liable for the loan, even if the business is incorporated with limited liability, or offshore.

We are finding an increasing concern from Directors of borrowing entities to put up personal guarantees to enable transactions to proceed.  This effectively leads to a stalemate, if an amicable middle ground cannot be achieved.

One solution is Personal Guarantee Insurance.  It is a fairly new product to the UK market, and is generating some serious interest from our customers.  It helps Directors insure against the potential risk the Personal Guarantees would impose if the deal went sour.  

Insurance policies are tailored for Directors who are exposed to Personal Guarantees, indemnifying a set proportion of the liability.  The insurance will pay out a percentage of the liability under the Personal Guarantee, which is often capped after a certain amount of time to around 90% of the maximum value. 

The amount of cover is dependent on the value of the Personal Guarantee given, and the length of time the insurance has been in place.  This insurance is used to give the director of new enterprises peace of mind as they progress into success.

We have successfully negotiated a number of Personal Guarantee liabilities down on behalf of our borrowers.  Across a range of sectors from Construction to Leisure we have exited positions for guarantees from £100,000 to £8,000,000. 

We utilised a range of proven structures and negotiating strategies to deliver results, a recent example being a £2,000,000 personal guarantee liability being settled for £0. 

If this advisory service would be of benefit then contact our Business Development Director Mark Reidy or our Managing Director Jamie Davidson to discuss on 0131 564 0172.

Jamie Davidson | Jamie@ConduitFinance.com 

Mark Reidy | Mark@ConduitFinance.com 

Fast Refinance to Avert Enforcement

We were approached by a new client in July 2015, after his debt was sold on to Cerberus from Clydesdale Bank.  The client was aware from other borrowers of Cerberus’ reputation and fact they would shortly be demanding full settlement of this lending facility.  He was therefore uncomfortable having his loan with them, and was seeking fast and constructive input to restructure and refinance.  

The client, like many who work with Conduit Finance, is an entrepreneur who runs his own business and has a property portfolio to compliment his trading business.  While technically complex to deliver, his request and mandate to us was simple; to have access to the whole of the market via one trusted contact with ease and speed of process. 

The key components of the deal were; moving properties from a Limited Company of which the client was the sole director and shareholder, repaying the entire debt in one drawdown in order to avoid any enforcement action by Cerberus, no additional cash input from the client, and a new to market, flexible lender who the client could carry out further business with post restructure. 

In order to save time and ensure complete clarity on the scope and process, we had two separate face-to-face meetings early in the process to gather all of the relevant information we knew all lenders would be looking for.  We took a few days to find the three best options on the market and presented these to the client, outlining with complete transparency the benefits and pitfalls of each.  

The criteria for each funder can be defined as follows:

Option 1 - lowest pricing.
Option 2 - speed of completion.
Option 3 - a new and reliable funding partner best suited for his future borrowing requirements.

Having considered our proposal, the client selected his preference and we continued in earnest with the underwriting process.  Due to a lower than expected valuation on one of the assets, additional funds were required. This was not an option for the client as cash-flow was at that time tight.  On review of our options and taking stock of the assets and the borrowers’ emotional engagement and future plans, we were able to combine the new debt with fast sale of a plot of land to repay Cerberus. 

In order to move the properties at their full value out of the Limited Company and into the client’s personal name, we worked side-by-side with his accountant to structure this properly to avoid the client having to liquidate any further assets.

The client was excellent to work with and committed to the process.  He was extremely busy throughout the transactions, so we were able to streamline the process for him as much as possible, and at the same time identifying funders able to support his plans for the future.

Conduit Finance’s technical acumen, deep knowledge of the market and direct access to specialist funders allowed us to add value to the client’s business and ensure the client is able to continue trading, grow his business and look forward to the future.  Post completion of this deal we have had 2 new individuals referred to us by the client. 

Online Property Finance Brokerage Delivers

When you want to move fast you need options. By using online property finance brokerage www.PropertyFinanceFinder.co.uk our client secured a market beating facility at 0.85% per month, and it was done quickly. Time pressure was a factor with the change in tax laws due on the 1st of April.  

By controlling the process the borrower was able to personally select the most suitable lender for his needs based on pricing, loan to value and geography. He selected a flexible lender who was new to market, which helped him secure the loan without the need for lengthy application forms or multiple layers of lenders underwriting. 

The lender had been recently added on to the platform so the borrower benefited from a new to market lender, despite the funder having limited profile at the time. Providing borrowers with access to best in market pricing is something we do every day. Our research team are constantly speaking to new and established lenders to understand how they can offer our property developer and landlord clients the best possible deal every time they need to borrow. 

Having delivered the desired loan quantum with a lenders fee of 1.00% and at an interest rate of 0.85% per month with no exit fee, our client was extremely happy.  

By ensuring the process moved along swiftly on both sides of the transaction, the deal was completed in 4 weeks. 

We now look forward to assisting this borrower with long term finance, as we work to launch the new property investment component of Property Finance Finder. 

To view which lenders could offer the best rate, or the highest loan to value please visit www.PropertyFinanceFinder.co.uk.

24hr Fund Raise for Unique Site, in Hugely Competitive Locale

Photo by caviarliu/iStock / Getty Images

Picture the scene, an existing client retained our services to provide a fast (sub 24 hours) bridging facility to enable the acquisition of an existing property and adjoining plot of land in the ‘city of dreaming spires’.  The opportunity being a short 15 minute walk from Oxford University.

We dropped everything to achieve Lender Heads of Terms in under 24 hours from the initial enquiry.  

It was a delight to be able to provide robust evidence of funds to enable our client to negotiate the final price (£900,000) and timeline with the vendor, secure the land, and allow legals to commence.  

The borrower, a very reliable and well established developer, did not want to miss out on such an opportunity given the location.  They were able to ring-fence cash for the deposit, and the percentage gearing gave a good selection of what the market had to offer.  The pressure was one of time and any failings on our part meant the loss of the opportunity, the forecast £1m profit which goes with it, and I expect, the client’s future business.  

We knew the lender who would support the bridging facility almost immediately, so we began a program of works with a tireless effort that saw us build the submission and supporting documentation into the evening, allowing us to present Lender Heads of Terms to our client the following morning.

The facility agreed was net £683,000 which would be required for a minimum period of 3 months with interest chargeable at 0.95% per month.

After delivery of the Lender Heads of Terms and the client securing the property/land, we were able to widen our search and research to bring down the interest cost and fees associated with the facility.   This was achieved by putting in place a development finance facility ‘day one’, so that the client did not have to use a bridging loan and therefore the additional set up fees and higher interest associated with this originally sourced ‘interim’ product.

If you or your clients require quick action from a committed, reliable and well connected team then we may be what you are looking for.  We are client side, and act at pace to put in place the funding you need, when you need it.  

Get in touch and run your scenario past us today.

Mark Reidy
Business Development Director
Mark@ConduitFinance.com
T 0131 564 0275
M 07775 678 087

The Seven Day Bridge

Having been referred to us by a previous client, we were engaged by our client to raise funds against an unencumbered property within extremely tight time scales.  The money was required to complete a purchase on a premium London off-plan apartment, within the agreed purchase date.  Unfortunately our client was unable to unwind existing investments as quick as was hoped, and turned to us to find a viable and deliverable solution to plug this funding gap.

Taking into account the prime location and nature of our client’s other properties, we decided to use a new to market family office we had met a week earlier.  The requirement for funds was needed within 10 working days, and we knew this would be deliverable given the lenders unique structure and their ability to make decisions and to deliver quickly.  

Having raised funds across two unencumbered properties, our client was able to complete the purchase on time with no further cash required.

By constantly scoping the market for new lenders, we were able to quickly make a decision on the most viable route given this specific requirement.  The £1,000,000 fund raise was met within the client’s tight timescales using a previously unknown lender.  The greatly reduced timescales were deliverable due to the lenders tight company structure, taking only seven days from heads of terms to final drawdown.  

Sean Crombie commented that “The ability to constantly refresh which lenders we have access to allows us a unique perspective on what is deliverable.  We are always striving to be at the forefront of the property finance industry.”
    
Having delivered the funds required within the desired timescales, our client was extremely happy with not only the solution delivered, but our transparency from the very beginning of the process on what could be achieved, and the likely costs involved.  

As a company we pride ourselves on a no surprises ethos, which ensures clarity as well as deliverability.    

Should you have a time pressured requirement for funding, do not hesitate to get in touch with a member of the team.

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com

Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com

Edward Page | Loans under £1m | Edward@ConduitFinance.com 

Sean Crombie | Business Development | Sean@ConduitFinance.com

Mark Reidy | Business Development | Mark@ConduitFinance.com

Meet the Team - Sean Crombie

Sean joined Conduit Finance in September 2015 as a Business Development Manager, working closely with our Business Development Director, Mark Reidy, and our Managing Director Jamie Davidson.

He started his career as a professional rugby player aged 19, and studied Business & Economics at the same time.  During his rugby career he played for Aberdeen Grammar, Border Reivers, Edinburgh Rugby and Newcastle Falcons.

He currently plays for Boroughmuir RFC in Edinburgh. 

Sean has worked on building and strengthening our external relationships with both clients and lenders. On a day to day basis he works with developers and landlords across the UK, helping them efficiently acquire and develop residential and commercial properties. 

The completion of a £1.1m property bridge in London in 7 days stands out as a recent success. It was the speed of the completion that was impressive, considering the lender was new to market.  They also didn't require a valuation which helped save time. 

Other recent successes include the debt forgiveness restructuring of an office investment away from Cerberus, and the funding of a residential development project at a 2.5% margin. 

Sean works closely with our research team to quickly release the specifics of any new to market lenders.  He is currently helping borrowers secure competitive stretched senior development funding at high LTC's, and flexible bridging finance from 0.60% pm. 

He is also working with a number of clients who have had their loans sold on to Cerberus, CarVal, Kennedy Wilson and Lone Star. These loans can be quickly and efficiently refinanced away from the loan managers, who are invariably Pepper/Engage Commercial. 

Restructuring is a specialist service Sean and the wider team can provide.

If you require live pricing or want to hear who the new to market lenders are, then please call Sean on 0131 564 0172, or email Sean@ConduitFinance.com 

Fund to Peer or Peer to Peer?

Tighter regulation on retail banks and looser regulation on new to market lenders, initially without any regulation, has resulted in a marked increase in the volume of property lending provided by peer to peer lenders.

Business models, mostly the ones seeking growth, are moving away from the retail investor as they are too slow to react and their cost of capital reduces the net return for the platform/peer to peer business.  They have adopted family office or fully institutional funding lines.

Most volume lenders rely in the first instance on a primary underwriter to take on loans quickly, then the constituent slices are sold down to the individual people classified as retail lenders.

The primary underwriter position is a very lucrative one as their pot of liquidity can be utilised many times during a year, so the annualised returns can be multiples of 1000%.

Most of the lenders we speak with rely on a pension fund or private equity investor to write the "larger" loans.  Most are actively seeking new funding lines for growth, before the big sell off comes and the peer to peer platforms are bought directly by private equity funds.

Smaller lenders can operate profitably without the need for deposits or the additional complexity of Financial Conduct Authority “FCA” approval.  That said, we are yet to see a full cycle; lend / repay / default / recover / re-lend, or even multiple full cycles to generate reliable data on risk, returns and defaults.

Counterparty risk is a hot topic and specifically relevant when considering new borrowing. Estimating how aggressive or consultative a lender will be if you default is almost impossible, but you can guarantee insolvency practitioners are currently courting peer to peer lenders for future work.

There are so many providers in the various sub-sector spaces within the market that tracking them, and their daily evolution, is challenging.

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com
Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com
Edward Page | Loans under £1m | Ed@ConduitFinance.com
Sean Crombie | Business Development | Sean@ConduitFinance.com
Mark Reidy | Business Development | Mark@ConduitFinance.com

£6m Solvent Restructuring Protects Family Leisure Business.

In mid-January we were contacted by a business owner who was under pressure, he had been referred to us by a surveyor. 

After many months of negotiations he had agreed terms to exit the Global Restructuring Group (GRG), of the Royal Bank of Scotland (RBS).  Transactions of this nature are time pressured, and if the finance isn't delivered then an enforced sale, administration or liquidation awaits.

During the first call I was able to reassure the client with a high degree of confidence that we could deliver the finance and protect his business, as we had recently delivered a number of similar transactions.  The experience my colleague Andy Lawson and I gathered whilst working in SME and Property banking also helped us structure and deliver a bespoke solution, which enabled us to solve the various issues.

The primary problem was that the funder he had terms from had pulled out, owing to a basic error in their valuation assumptions.  The new lender wanted to lend off a 90-day assumption, which resulted in a far lower loan than if they were lending off a full open market valuation figure.  The deal didn't work for the borrower, as it left him short of what was needed to settle the current loan and allow the business working capital to breathe.

We work with lenders who use this 90-day assumption, but it can be difficult to get the loan needed to match the loan offered, owing to the variable nature of the net loan sum versus the actual open market value.  On this topic we always advocate engaging with surveyors earlier in the process than normal, to de-risk the valuation figures and to avoid last minute surprises.

The security in question consisted of a lucrative land site with planning consent for new houses, and a trading business in the leisure sector.  The land had a simple valuation metric based on a value per plot, and a net land value after a work back from a gross development value.  The leisure business was profitable, but was taken on a vacant possession basis as opposed to an EDITDA multiple, so a suppressed 90-day valuation off a 65% loan-to-value metric would result in a 50%-55% loan to open market value ratio.  The assets were the product of many years of hard work, financial investment and marketing creativity, so their emotional value was almost equal to the financial value. 

Our involvement was focused on the fund raising. The components were simple; we had a fixed net number to redeem RBS GRG, a working capital float to raise and the loan needed to cover all associated transactional costs plus the lenders interest and fees.

The scope was challenging and simple in equal measure, to deliver the finance in 4 weeks.  This ruled out the vast number of lenders in the short term lending market, and despite what lenders purport, most are unable to deliver £6,000,000 of finance in this time frame.  The asset class and exit strategy also did not fit with most lenders.  Then finally, and crucially, we required a lender who was able to lend off an open market value figure, and not a 90-day valuation figure.  Through our ongoing investment in lender research and our relationships with funders we were able to quickly, and with confidence, select a lender that would deliver.

Thereafter Andy Lawson worked closely with the borrower to quickly advance the documentation and lenders due diligence requirements.  Starting at 7:30am and exchanging emails well past midnight Andy worked solely on this transaction from enquiry to close, including weekends.  His role involved the coordination of all parties, including the lenders solicitor, the borrower’s solicitor, the valuer, and of course the lender themselves.

The primary value we added to the process was to deliver a lender who would act quickly.  As crucial as lender sourcing is, just as important is the transactional support we provide to drive the deal forward quickly, whilst commercially navigating all obstacles.  The legal process remains the main time delay in transactions, with the selection of solicitors being a key focus when preparing a deal plan.

On the 22nd of February the funds were remitted and the deal closed.  After a short and intense sprint, the borrower was back in control of his assets and able to look to the future growth and profitability of his business, without the burden of potential insolvency.

Solvent restructuring is a specialist service we provide to borrowers and sponsors of Corporate and SME businesses, as well as developers and investors running property companies.

Our recent successes have been UK-wide and for businesses with £1m to £80m of debt and/or asset value, and we have experience in formulating strategies and delivering written down exits for Personal Guarantees.  Our recent mandates are across a range of asset classes from Anaerobic Digestion plants in the Renewables sector, to Golf Courses and Hotels in the Leisure sector.  Based in Edinburgh and active in London, we have also closed several cross border restructures for Isle of Man, Guernsey and British Virgin Island (BVI) companies.

If you, or your clients, are facing a restructure in the UK, or offshore, and need urgent, reliable finance options along with creative advisory services then contact Jamie Davidson at Conduit Finance. 

Jamie Davidson I Managing Director I 0131 564 0172

Jamie@ConduitFinance.com

Residential Development Finance – Latest Funding Prices

Having returned to the UK after working overseas, it is clear that the property development finance market is quickly evolving.  The widespread under supply of housing is supported by huge demand from occupiers and investors alike. 

The various sub-sectors are all equally active, with student housing and private rented sector both at the forefront.  As such the lending market is evolving by the day, with more and more liquidity coming into the market.  Loan to costs are increasing, while pricing is compressing.

We have seen an increase in the number of lenders active in this sector.  Retail banks are providing rates as low as 2.50%, and stretched senior lenders can provide attractive loan to cost facilities at 90%. 

This week we have received several telephone calls from newly active lenders looking to deploy capital into the UK residential development finance market.  Most of these lenders are backed by private equity funds or family offices seeking income yield.

Lender type                    Loan to cost                Lenders fee             Rate pa              Exit fee
Family office                    100%                            2.00%                       7.00%                 0% of profit
High LTC 1                       90%                             1.00%                        10.00%                1.00% of debt
High LTC 3                      85%                              1.50%                        6.50%                 1.00% of GDV
Lean pricing 1                  65%                              1.00%                        3.00%                 0.00%
Lean pricing 2                 50%                             0.50%                        2.50%                 0.00%

2016 is likely to be an active year for lending in the UK, with 2015 having seen the highest levels of property finance since 2006.  We would anticipate that there will be an inevitable increase in the lenders risk appetite, and a reduction in the net cost of finance as lenders compete for transactions.

If you have any requirements we can directly quote for, then please do not hesitate to get in touch with me by email or phone below.

Sean Crombie

Sean@ConduitFinance.com
DDI: 0131 564 0274
M: 07595 520 577

The Evolution of Highly Geared Private Debt

The Evolution of Highly Geared Private Debt

In both vanilla and also restructuring transactions private debt is playing a pivotal role in making transactions happen.  The use is broader than its name might suggest.  It spans both corporate and property borrowing, and can come from private individuals, family offices or from larger funds.

There is a global availability of private debt lending from a range of sources, all of whom are hungry for an upper single digit, or double digit return per annum.  There are a number of local, US, European and Asian funding lines currently active in the UK.  These lenders are active in London but the real margins they seek are accessible in the regions.

Their appetite and liquidity is driven by a number of macro reasons such as the contraction of
European and U.S retail bank’s balance sheets, and the lack of dividends and yield available from equities.

These lenders have several unique selling points, such as short reporting lines that enable quick decisions to be made, pan‐European appetite out of one main office, and their flexibility when structuring covenants.  

If their benefits were ranked then gearing would be number one, certainty and ability to quickly deliver as number two, and number three would be the repayment structures, which can be interest only, rolled up or back loaded.

Recent term sheets we have delivered include: 

• 75% loan to value (LTV) facility on a single tenant office investment acquisition, at a 6.00% rate with only 4 years remaining on the lease.
• 90% LTV for a well located commercial building refinance at an 8.00% rate, which was going through a Bank of Scotland Business Support Unit (BSU) restructuring.
• 75% LTV bridge finance facility at 1.00% per month, for a hotel and land site exit from Royal Bank of Scotland Global Restructuring (GRG).

Pricing can vary depending on the transaction, with the leanest rates from 4.00% per annum for well located property investment lending, up to 15.00% for infrastructure lending.  They invariably seek “make whole” provisions to ensure they get a fixed return.

Much like the rest of the UK property and corporate lending market, there is a brisk evolution happening.  Interest margins are being compressed and there is a gradual uptick in LTV’s, which leads to a direct correlation in increased risk.

The record high volumes of lending in 2015 look set to continue into 2016 and beyond. 

Jamie Davidson I Managing Director I 0131 564 0172

Search for private debt bridging options here: Property Finance Finder

www.ConduitFinance.com

Brokers Love Conduit

In January 2016 we successfully completed a land bridge within a three week window for one of our valued introducers.

The facility was for £4,000,000, secured by a residential development site in England.  Our client was a house builder who was about to lose the site, along with the £2.5m profit that went with it.

Conduit’s Andy Lawson worked around-the-clock with the introducer to quickly pull together the due diligence pack and secure heads of terms that the borrower was keen to progress with.

The broker said, "Despite the complexity of the deal and very tight completion deadline, Conduit worked tirelessly to complete the facility for a very satisfied client."  Conduit Finance Managing Director Jamie Davidson commented, “This is the type of deal we enjoy delivering for our introducers.  We never circumvent introducers and welcome the opportunity to work with more of our partners in the future.“

Did we mention the broker received £32,000 for the introduction and was paid same day?

If you or your clients have a time pressured situation, then we are here to start early, finish late and work weekends to make it happen with our many sources of lending.

Jamie Davidson | Loans over £10m and restructuring | Jamie@ConduitFinance.com

Andy Lawson | Loans over £1m | Andy.Lawson@ConduitFinance.com

Edward Page | Loans under £1m | Edward@ConduitFinance.com 

Sean Crombie | Business Development | Sean@ConduitFinance.com

Mark Reidy | Business Development | Mark@ConduitFinance.com

Mark Reidy strengthens the team at Conduit Finance

Mark Reidy has joined the Conduit Finance team as Business Development Director.  He brings 20 years of financial services experience to the Edinburgh head-quartered team.  Prior to taking up this role he worked closely with property developers for the Checkmate division of Lockton Companies LLP, one of the world’s largest privately owned insurance brokerages.  

Mark also spent time in the senior team of Buildstore, who specialise in self-build, custom build and residential development funding.  He is a client focussed and service driven business professional, who will help provide clients with bespoke solutions under the Conduit Finance and PropertyFinanceFinder.co.uk brands. 

Conduit was launched in 2007 by Managing Director Jamie Davidson.  Conduit Finance has continued to provide a point of difference in Corporate Finance for SME, Corporate and Property clients.  Factors that differentiate Conduit from the competition include their extensive panel of established and emerging lenders, the technical ability to structure deals, their solvent restructuring track record and expertise, and their dedication to increasing their clients' wealth. 

Mark joins the eight strong team and will be working closely with Managing Director Jamie Davidson to improve the client proposition, grow revenue and improve processes.  Jamie said “The appointment of Mark to the team is a real win for both the business and our clients.  Mark’s proven high levels of service, trust and transparency are well aligned with the values within our business.”

Risk v Rate - achieving balance in the lending process

Risk v Rate

A 0.25% increase signals economic growth and brighter business opportunities on the horizon for 2016, but what does this mean for the UK lending market? 

The sun is out but confusion is rife as the economy improves.  Lenders are issuing credit under competitive pressures, and whilst also trying to gauge credit risk policy, at the same time as the market quickly evolves.

Interest margins are being slashed with discussions invariably ending 1.5% below where the conversation began, and that's just the margin.  Understanding what lenders have offered recently is crucial to get to the lowest end of their pricing matrix. 

Lenders’ arrangement fees are also compressing, with a 0.25% to 0.50% expected to be the norm in time. 

In a recent fund rising negotiation the borrower was saving £50,000 per week, as we hurtled through the lender beauty parade.  It's the race to the bottom on pricing, and also the race to who loses capital first.

The volume of available of liquidity continues to surprise, but as ever availability doesn't mean accessibility.  Prime credit policy is tight, which is creating a large and evolving specialist lending marketplace where flexibility and speed are USP's. 

From a borrowers perspective the alternative lenders can represent fantastic value.  A rate of 6% may not be appealing but it can be dynamic and profitable if utilised for an asset management opportunity or to secure a debt forgiveness package from an incumbent bank. 

Whatever tier of the market a transaction falls into, there is price confusion as the reward isn't reflecting the risk.  Non-recourse finance is more available than ever since 2007, with lenders backing asset and economic growth.

If we base our opinion on recent experiences in restructuring and debt forgiveness, then having personal guarantees in place does ensure that the Directors/borrowers do stay at the table.  This is both good news for the bank, and in retrospect oddly good news for borrowers.

If they have negotiated patiently most of the borrowers with personal guarantees have managed solvent restructures, which means they have recovered all assets, avoided personal guarantee enforcement, and had their debt written down.  Whether it’s serviced by trading business EBITDA or by rental income the outcomes can have been the same.

Serviceability calculations, and more importantly sensitised debt service calculations, are being made on heavily biased assumptions to ensure that any credit issued is "safe". 

How does a lender get an edge and get deal flow?  I'm awaiting a third factor, but in the meantime it's simply lower pricing and loosening credit risk policy, which is great news for borrowers. 

It's going to be a very interesting 2016.

Follow us on Twitter, LinkedIn, Facebook or sign up to our newsletter to see how you can benefit from pre-emptively reading the market. 

Contact Jamie direct on 0131 564 0172 or email jamie@conduitfinance.com 

Relevant Life Plans - Tax efficient life cover

Relevant Life Plans - Tax efficient life cover for companies and their directors, what you need to know.

If you are a company director and pay for your own life cover, getting your company to take out cover on your life could save a lot of money.

Relevant life policies are a way of providing highly tax efficient death in service benefits on an individual basis for you and your key employees, no matter how small your business is.

Who might relevant life policies be suitable for?

• Small businesses that do not have enough eligible employees to warrant a group life scheme
• High-earning employees or directors who have substantial pension funds and do not want their death in service benefits to form part of their lifetime pension allowance
• Members of group life schemes who want to top up their benefits beyond the scheme rules
• They are not suitable for the self-employed or equity partners or members of limited liability partnerships, although their employed staff could be covered.

Are there limits to the cover I can have?

The legislation does have some limits to qualify for the tax concessions, and to ensure these are met:

• The cover must be paid in a single lump sum before the age of 75
• Only death benefits can be provided
• Benefits should be paid through a discretionary trust
• Beneficiaries should be restricted to the employee’s family members and dependants.

What is the maximum amount of cover I could have?

The maximum cover available is up to 25 times the salary for employees aged up to 39, and 20 times the salary for employees aged 40 and older.  This can include salary, regular dividends paid in lieu of salary and any taxable benefits in kind.

Example Saving

Assuming £1,000 premium for life cover, the saving to the company on a relevant life cover plan can be as much as £770. Net cost to company to generate income for director to pay own life cover premium of £1,000 is £1,570.  Net cost to company for Relevant Life Plan premium of £1,000 is £800 – saving £770.

This assumes the cover is for an employee paying income tax at 40% and employee’s NI contributions at 2%.  Also assumes company pays corporation tax at small companies’ rate of 20% and will pay employer’s NI contributions at 13.8%.  Contact us for detailed explanation of this example.

Please contact Stuart Cardozo on 0131 564 0172, or email Stuart@ConduitFinance.com for more information about Relevant Life Plans.

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The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.  It represents our interpretation of current and proposed legislation and HMRC practice at the date of publication.  These may change in future.

Conduit Private Finance LLP is an appointed representative of SWC Independent Ltd which is authorised and regulated by the Financial Conduct Authority.

Direct Lending Market Buoyant

The SME corporate finance debt landscape has changed significantly over the past 6 years. 

Old institutions have disappeared, or scaled back activity and in their place is a growing pool of liquidity managed by a large number of fund managers.  These direct lending funds now play a major role in sponsor led event financings, and will increasingly be relevant to private companies without a financial sponsor.

Find out how direct lending and private debt can accelerate the growth of your business here.

Contact Stu Donald on Stu@ConduitFinance.com to see if direct lending could accelerate the growth of your company or negate the need for other types of finance. 

Buy to Let Mortgage - Limited Edition Best Buy

Giving landlords peace of mind, this is the market leading, longer term fixed rate available for buy to let mortgages.  Limited edition, so please contact us to register your interest while stocks last.

• 5 year fixed rate at 3.99%.
• Available up to 80% Loan to Value, allowing clients to expand or improve their portfolio.
• Rental stress test at only 3.99%, even at 80% LTV to get more from the rental.
• Free standard legal fees.
• Reduced completion fee of 1.5% (no minimum) added in – even if takes above 80% LTV.
• Revert rate – standard variable rate minus 1% - currently 3.98% with no tie ins when fixed rate ends.
• No minimum income, income from rental acceptable – professional landlords.
• No portfolio limits.
• To 75% any form of capital raise options include business purposes, debt consolidation etc. to 75%.
• To 80% anything property related including reducing residential, home improvements to other properties, purchasing new properties, transfer of title.

Please contact Stuart Cardozo on 0131 564 0172, or email Stuart@ConduitFinance.com for more information.

Corporate senior debt landscape evolving to the benefit of management teams.

Over the last few years we have seen more entrants in to the senior debt corporate lending market.

Private Debt lenders have emerged, evolved and now feature frequently when transactions are being closed. Offering an alternative to the prime senior debt lenders Private Debt and Direct Lending platforms can deploy lending across the capital stack and can take a creative approach when modelling their income return.

Differentiators include no amortisation, covenant light term sheets, loan structures to match asset management or acquisition profiles and the ability to close transactions quickly.

Stuart Donald is our Director of Corporate Finance here at Conduit and he has created a useful guide to alternative lenders.