Client circumstances:
Our client was a small business owner who had been hit particularly hard by the pandemic and had accrued numerous debts. Having previously relied on face-to-face sales and with no website, the sudden closure of non-essential bricks and mortar stores in March 2020 meant they were unable to trade during the three lockdowns. Determined not to load the business with debt – and to keep it afloat – they instead took on the costs themselves.
With many of these debts due to be repaid, the client urgently required financial assistance. They had initially planned to raise the capital by selling their primary residence, but this was going to take too long. Instead, they approached their broker, who immediately contacted our regulated team.
MT Finance solution:
In addition to repaying their debts, it was crucial that the client could provide cash flow into their business so it could keep trading. Part of this strategy included ‘futureproofing’ the business and creating a transactional website for it. Not only will this establish a secondary income stream, but it allows the client to continue generating sales if the physical store ever has to close again.
Understanding the client’s need for flexibility, we were able to leverage the equity in their property and provide a second charge regulated bridging loan of £143,000 at 46% loan-to-value. The term was set at 12 months with no exit fees or ERCs.
The benefits:
Because we took a common-sense approach to the case, we were able to find a solution which best suited the client’s situation. The bridging loan has enabled them to repay their debts as well as start to grow their business and launch a website. They will exit the bridging loan by selling the security property and instead move to rented accommodation close to the store. The funds to cover this expenditure were included in the bridging loan. If this happens in less than 12 months, then the client can repay their regulated bridging loan without facing any early repayment charges or exit fees.