Conduit Finance Sponsor The Italian Job II - The Bill McLaren Foudation

We are delighted to support and sponsor The Italian Job II, a lunch with Sean Fitzpatrick, and Andy Nicol, in partnership with Boroughmuir RFC & The Bill McLaren Foundation.  This fantastic afternoon of rugby entertainment at Murrayfield supports the work of the foundation.

Click Here for the Event Programme - The Italian Job II, 17th March 2017 - The Bill McLaren Foundation
 
Sean Fitzpatrick is a legend of international rugby and international sport. Sean played 92 international rugby  matches for the All Blacks from 1986-1998, including a world record of 63 consecutive Test matches and 51 Test matches  as captain.
 
Andy Nicol has launched a successful broadcasting career since retiring from Rugby and is a popular and successful front man at business and sporting events. Andy played 23 times for Scotland and captained the national team in the famous win in 2000 over the Auld Enemy which thwarted their Grand Slam ambitions that year.

The Bill McLaren Foundation
 
Bill McLaren was a man who represented all that is best about rugby union. He was known as “The Voice of Rugby” not just because of the beauty of his tone and the delight of his imaginative phrasing, but because he portrayed our game as we would always wish it to be.
 
The Charitable Foundation was set up in March 2010 to raise funds to support the development of rugby and its values and also to recognise the contribution Bill McLaren made to rugby through education and the development of an interpretative centre including Bill's extensive archive including his big sheets.
The Foundation has been set up in Bill’s name, and with the support of his family. 

The Bill McLaren Foundation Website

100% funding for residential developers

Dynamic Debt for Developers

A familiar problem for developers is being unable to commit equity to all of the developments they have the opportunity to start. This is usually a reflection of the economic cycle when opportunities can outweigh liquidity.

This may be because they have committed their funds in other developments, or they do not want to use their own money in the transaction. What providers of 100% loan to cost (LTC) funding are offering is a more equity friendly alternative to senior debt or stretched senior debt, but with a profit share to reflect the additional risk associated with lending 100% loan to cost.

100% LTC funding can be used for speculative residential developments, student accommodation or commercial developments. Office to residential developments and detached/semi-detached houses are both well suited to the internal rate of return (IRR) model that lenders use. 

Lenders who fund 100% of development costs are usually small by comparison to retail banks, and are invariably led by an individual who used to be a developer, or has a longstanding experience of development projects. There are a range of lending structures these funders use; from one individual providing all the cash as a debt loan, to one primary investor supported by minority investors via a joint venture agreement, with a priority profit for the lender. There are usually two components, an interest rate applied against drawn funds and a profit share, sometimes structured as an exit fee.

The traditional model of an arrangement fee, interest rate and exit fee isn't usually utilised.

The lenders will approach each transaction as if it was their own, which benefits both the developer and the lender. They will look to ensure construction costs are in line with realistic market norms, and that projects provide upwards of a 20% profit on cost. Most will take some geographical risk and some may even back first time developers.  Demand from the end buyers of the completed property is fundamental.

Loans can vary from £500,000 to £10,000,000, with larger projects possible on a deal by deal basis. Interest rates applied on drawn funds are around 5 - 12% per annum, which are rolled up into the facility, and payable on drawdown. Profit shares vary on a deal by deal basis, with a minimum lender percentage being 30%, to a maximum of 60%. Some of our providers permit any additional upside in addition to the day one projected net profit, to be retained solely by the developer.

100% development funding is usually a loan and not a traditional joint venture. Unless the project experiences difficulties and a default is experienced, the lender's involvement is purely that of a lender. The lender will agree the terms of the facility, and lend from their company to a special purpose vehicle (SPV). The developer will own and control the SPV and the cash flow in line with the monthly drawdown parameters. In most cases, no personal or corporate guarantees (PG's) are required, and no personal security is required to be pledged. In some cases if the risk is above average then a PG may be required. A debenture over the SPV would be required as normal.

Our role in projects of this nature takes one of two forms: 

1.     Finance Brokerage service: to facilitate the introduction to the lender, assist with the collation of documentation and completion of application forms and then to provide consultancy services to support the borrower through the process.

2.     Debt Advisory service: a more hands-on approach than the brokerage service which involves; drafting of citing paper and information memorandum, term sheet and facility documentation reviews, negotiation of the covenants, advice on how to optimise the capital structure, guidance regarding the lender underwriting process and how to navigate pitfalls, assembly of the professional team and support securing a contractor, and helping to structure the cash flow and transaction.

Our success fees can be included in the development facility so the developer does not need to settle fees from their own resources.  

At Conduit Finance, we have been delivering innovative sources of finance for developers since 2007. 

Contact Jamie Davidson to find out how you can exploit dynamic debt for development.

Jamie@ConduitFinance.com | 0131 564 0172 | 07919 863 034

Deal Done - 100% Development Funding

Loan type: 100% of all costs including acquisition.

Location: Glasgow.

 Loan amount: £1,500,000

Lender type: Private Debt Fund. 

We were initially approached by a client with a prime development opportunity in Glasgow. The client had a lack of ability to commit funds to the transaction, due to vast ongoing development portfolio he was currently operating. Given their experience and quality of product produced we believed we could deliver a package that removed the need for equity from the development.

Utilising our relationship with a Scottish focused private debt fund, we were quickly pull together a proposal for the development, with a loan requirement of £1,500,000, covering all costs of the development. With a £600,000 profit at stake, we managed to secure the best profit share possible.

 A formal offer from the private debt fund was delivered within two weeks, allowing the client to submit a credit backed offer for the site which was subsequently accepted. The accepted offer included, a 65% profit share in the developer’s favour, along with any uplift beyond the agreed sales figures.

After only five working days on site, the developer has negotiated a sale at £45,000 above the additional appraisal agreed with the funder and developer. The developer retained the full £45,000 as this was ahead of budget.

 Conduit Finance’s Sean Crombie commented;

“Zero available equity is a common problem faced by experienced and active developers. The solution delivered not only allows our client to act on this scheme but gives them confidence regarding future opportunities.”

 Our client commented;

 “Sean at Conduit Finance placed our requirement successfully after listening carefully to our needs. They are very meticulous and very niche which was what we were looking for. We found Conduit easy to deal with which is a breath of fresh air. This is the beginning of a long relationship for us.”

 If you are an experienced developer being presented with viable scheme’s then please do not hesitate to get in touch for a quick decision on whether full funding would be deliverable.

Sean Crombie | 07595 520 577 | Sean@ConduitFinance.com

Swedish entrepreneur lands in Scottish mansion.

·        Loan type: Private dwelling house residential mortgage 

·         Location; Scotland 

·         Loan amount; £1,000,000

·         Lender type: International Private Bank 

The borrower had moved from Sweden to Loch Lomond and needed to refinance his house in order to release funds to renovate the B listed building, enabling it to then become his main residence. The property was a substantial period property previously utilised as a youth hostel. 

The borrower, an ultra-high net worth individual and foreign national, had no UK income to declare and so had to utilise his global income. This required the private bank to carry out extensive translation and information gathering from various EU countries, to ensure he was complying with various rules and regulations, and complying with lender affordability calculations. This was in addition to the recently tightened money laundering regulations. 

Mark Reidy was called by the borrowers secretary as she was made aware of Conduit Finance from our website after a search of advisers who had experience sourcing finance through private banks. Mark approached a number of banks with the objective being secure a competitive refinance package to release £1,000,000 of capital from the property. These funds were used to repay the overseas directors loan – originally used to buy the property – and the remained of the funds were used for full renovation of the property.

After experiencing our service and our access to Private Bank mortgage lenders, the client said; 

‘We like to thank you for all your help and efforts in finding a mortgage for our a-listed burnet building that was in need of a major renovation and updating. With your professional contacts to banks and private banks it was in a short time possible to get the right mortgage’

We are now looking to assist the borrower with commercial property acquisitions in order to grow his property portfolio.

If you are a business owner, entrepreneur or professional adviser seeking a mortgage solution that is  bespoke then please contact Mark Reidy to discuss how we can assist. 

Mark Reidy | Mark@ConduitFinance.com | 07919 863 034

How do you navigate a disagreement with your bank?

It can be a difficult balance to strike when you want to resolve the problem without creating too much friction. That's at the same time as also trying to secure the best outcome for you and your business. 

Parties that are in a dispute both invariably want to resolve their issues in the most cost effective and time efficient manner. Removing emotion and focusing on the commercial drivers is vital.

Mediation is a future focused problem solving process, which is tailored to meet the needs of both parties. Mediation can be used at any stage of the dispute and is for all levels of disagreements. It’s a process that has worked well in all of the economic cycles be it a recession or growth. 

Sectorally the businesses that we have worked with vary with some consistent trends in the licensed trade or in renewables. 

We have utilised banking mediation when settling unresolved disputes such as debt proceedings, securing judgements against Directors, appointment of receivers and possibly bankruptcy proceedings.

The process allows for a mediator to guide both parties down the path of a voluntary agreement on either part of or all aspects of the disputed issues.

In all of the cases we have resolved over the past five years there has always been a high level of disagreement at the start of the process. When working with restructuring or enforcement teams within banks their agenda is clear.

The role of the mediator is to bring the parties to acknowledge the strengths and weaknesses of their respective positions and to assist the parties in framing a solution which both sides can live with long term. 

All discussions are held on a without prejudice basis which allows both parties to discuss, within reason, their issues with an element of comfort knowing that the content will not be relied upon in a court of law.

This does not compromise either party’s position as by this stage they are both focused in the deliver of a resolution.

One of the most beneficial aspects of mediation is that it brings both legal and emotional closure for all parties. The negativity that resulted from the earlier conflict can, as much as it can be, set aside. 

If you feel you are getting nowhere whilst speaking to your bank then please make contact to discuss how we can help you quickly resolve the problem to allow you to return to growing your business.

Contact Managing Director Jamie Davidson for an insight into how

Banking Mediation could help end your frustration. 

Jamie@ConduitFinance.com

0131 564 0172

07919 863 034

Speed, funds within 8 days.

Deal type – Working capital.

Client – Residential property investor.

Location – Glasgow.

Product – Unsecured SME loan.

An existing client introduced us to a ‘new to business’ client seeking insight and help when they were in need of short-term capital.  This was to assist with the funding of soft costs in relation to a new property venture. 

Mark Reidy met with the clients one day after introduction was made and, after a detailed fact-find and requirements analysis, introduced and explained to them a new to market unsecured lending product they could utilise to see them through this early phase.

The client was a well-established, family run business with decades of trading experience and excellent credentials.  They engaged Conduit Finance to act formally on their behalf on the 27th of October.

Mark and Jenny then worked together behind the scenes to deliver robust heads of terms to the borrower the same day.

Jenny then gathered detailed client information and supporting documentation, enabling her to complete the lenders application process.  A conditional offer was then received six days later from the lender.

On November 7th, the same day the conditional offer was issued, the application was formally approved by the lender credit team and the loan was fully funded via the lending platform.  Drawdown happened just two days later.

This is remarkably fast funding.  Our client is extremely pleased with the process and outcome.

Our client said;

“Having being in the property business for over 45 years we have spoken with many financial brokers and without question Conduit Finance is one of the best we have dealt with.

We found your approach and assessment wasted no time with a most professional back up and solution within a few days, your offer was backed up with action and results, we would have no hesitation in recommending you services elsewhere”

 Mark Reidy and Jenny Taylor delivered this facility for the client. If your business could benefit from such funding, please contact Jenny

Jenny@ConduitFinance.com  

0131 564 0172

We love a time challenge

Deal type - Acquisition of listed building

Client - Residential property developer

Location - Glasgow, Scotland

USP - Fast delivery of 100% the purchase price

Loan sum - £2,300,000

Product - Commercial property bridge loan

When a developer was let down by a bank, and needed a deliverable solution fast, their solicitor knew who to trust, Mark and Andy at Conduit Finance.

The client, a well-established and profitable UK-wide developer, had terms agreed and in place with their existing funder.  Just days before completion, and post the Brexit result, last June, their funder decided to pull out of the Scottish market in late July.

Mark Reidy received the call from the solicitor to assist with the urgent funding requirement. He was tasked with sourcing acquisition finance within 6 weeks to ensure the developer secured a site with a development net profit of £2,000,000.

Mark then worked with his colleague Andy Lawson to undertake quick due diligence and to scope the client’s requirements. Using our lenders database of over 400 active sources and our market knowledge we quickly placed the requirement with a reliable lender who could deliver.

Next day they met with the solicitor to further scope the requirement, security and the client’s expectations. At the meeting Mark and Andy presented a number of potential solutions with a plan A and plan B being agreed.

Mark presented the solutions to the borrowers and our letter of engagement was signed same day.

After the collection of data and supporting documents we drafted a proposal for the lenders and after submission we secured heads of terms within 24 hours.

We search the market every day for interesting new to market lenders and creative products. This investment in innovation ensures when we get the opportunity we can react decisively.

From start to finish the process took 6 weeks and we have been instructed to raise another £4,200,000.

And good news from our perspective, we have been retained by the borrower. We look forward to delivering for both the client and the introducer again in the future.

Our client said

 "The certainty Mark provided regarding the deliverability of our funding gave us peace of mind throughout the whole process"

The introducer said;

“We are delighted with the service Andy provided to our client to enable the fast completion of this transaction.”

If you have a similar time pressured requirement please call Mark Reidy or Andy Lawson, either inside or outside business hours, for comfort and a solution.

Mark Reidy           Mark@ConduitFinance.com             07775 678 087

Andy Lawson        Andy@ConduitFinance.com              07929 612 502

Edinburgh Rugby Invest in leadership for growth.

Retired fly half – Duncan Hodge looked to breathe life back into the depleted Edinburgh squad with methods that could be mirrored in the investment market.

Playing predictable and one dimensional forwards rugby over the past three years, Edinburgh rugby have failed to make the top six in the pro 12 since, causing them to lose seven of their past eight games.

Their perceived strength was in the forcefulness, organisation and the intensity of their pack, but even those assets have proved questionable since the start of the season.

A win in the Edinburgh camp last weekend against Treviso tremendously lifted spirits, sending Edinburgh rugby on the road to recovery. As Edinburgh fans we’ve suffered our fair share of defeats, and like Hodge we know there are lessons to be learned before any sustained improvements can be made by any of the investors.

Like Edinburgh rugby, the market can only improve if responsibility is accepted by the investors who are able to make the changes.

When asked by the BBC about accepting the need for changes Hodge said; ‘I don’t think the guys are playing anywhere near their potential. We accept that. I accept responsibility for that as well. I’ve been here nine months.’

In the investment market, in order to get the market, back up and running people need to be prepared to accept the responsibility, face the challenge by taking larger risks.

There is ‘No lack of Hunger’ to fix things in the Edinburgh camp. The aftermath of Alan Solomon leaving his role as head coach, after starting the season with three defeats in four matches, this Scottish youth stepped up last weekend. Post team selection, Hodge told the Pro12, http://www.pro12rugby.com/, ‘More than anything, I want these young boys to step up and be the best they can be’, each and every one of them brought triumph to the Edinburgh side, arresting and reversing the losing run. It’s long overdue.

What Hodge realises is that different skills and spirit were needed to make the changes and be successful. In the business world, this means finding the right team of people to make the change and aid success. Having the right team working together to achieve one goal is dynamic.

Acting head coach Duncan Hodge knows and plans to achieve much more in the near future with the young players he is beginning to nurture on this victorious road. During an interview with the Pro12, http://www.pro12rugby.com/, Hodge said ‘We saw this game as a chance to get back to winning ways. There is still so much to do. There’s a lot of great things at the club but everyone else marches on and improves and we’ve got to do likewise.’ He knows there is still a lot more to give, sitting back and hanging up their boots is not an option for anyone of the Edinburgh rugby players or coaches.

Just like in the rugby world, knowing your market and using local knowledge is essential in the investment market. As the saying goes ‘fail to prepare, prepare to fail.’

Is it about time that the Conduit Team invested in you to help you grow your business?

Jamie Davidson Jamie@ConduitFinance.com   07919 863 034

Jenny Taylor Jenny@ConduitFinance.com   07736 780 070

www.ConduitFinance.com

Flexible finance, can you benefit from Unitranche lending?

Providing debt advisory services to borrowers and sponsors gives us a daily view of the evolving market place. Every day new lenders enter the market, causing it to become increasingly opaque. Innovation is more prevalent than ever before with the international influence now benefiting UK borrowers.

Historically lenders have differentiated themselves from the fierce competition by offering aggressively low pricing, reducing arrangement fees and offering relaxed, flexible covenants.  

In more recent time, the credit market is being penetrated by new non-banking and private debt lenders, who have had a long and prosperous heritage in trading bonds and private equity, allowing them to offer differentiable credit such as unitranche loans. 

Capital is now taking many forms and filling many different spaces so the traditional senior debt, mezzanine and equity is no longer as clear as it used to be. 

Unitranche transactions are governed by a single document typically called the Agreement Among Lenders (AAL). Unitranche lending involves one tranche of debt and a first/ second charge structure as well as a single credit agreement for long term capital. Opposed to the typical two-tiered senior debt, separate notes and security agreement for two classes of debt with complicated inter-credit agreements. 

The inter-creditor’s rights and obligations are detailed within the AAL. It allocated interest and principal payments disproportionally between the lenders, creating a multi-tranche transactions. 

The unitranche debt instrument was created to simplify debt structure and accelerate the acquisition process. A unitranche loan can be advanced by a single lender or if the hold is too large for one particular lender, the lender has the option to split the unitranche loan into “first-out” and “last-out” tranches to one or more lenders. A unitranche loan requires only one credit agreement, one set of security documents and negotiation with one lender.  The reduced complexity of a unitranche loan often results in reduced legal fees, quicker closing times and increased certainty of closing; all features which are extremely important to today’s borrower. This will potentially remove any potential complexity and reduce the legal fees. 

Unitranche loans give different rights to the different lenders participating in each loan, these rights will depend on what ‘tranche’ of the loan the lender is funding. 

Unitranche lending is more transitionally focused than relationship focussed as traditional banking loans would be. This is due to the single offering and the geographical location of many unitranche lenders. Additionally, subordinated debt lenders tend to have fewer companies in their portfolios than do unitranche providers, allowing them to spend more time understanding the companies and working out problem situations.

Small and lower middle market businesses are increasingly benefiting from unitranche financing solutions, which offer the advantages of speed, simplicity, and certainty of closing. EBITDA multiples can be in the upper single digits so where a senior debt provider permits 3x as a multiple Unitranche lenders could offer 8x. 

This type of facility removes the need for mezzanine finance and will minimise, and possibly completely remove, the need for management team, or sponsor, equity. 

Recently we have seen unitranche loans used to stave off equity dilution in growth capital corporate deals or as highly leveraged dynamic debt in asset management plays for real estate. As you will have imagined there are a number of other ways to utilise this flexible type of funding. MBO/MBI's and re-capitalisations are also suitable transaction types that could be compatible. 

We are happy to speculate our time to help clients ascertain if a Unitranche facility provides them with a solution. 

Please contact Managing Director Jamie Davidson to discuss Unitranche lending as part of our Debt Advisory offering. 

Jamie@ConduitFinance.com

0131 564 0172

07919 863 034

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