Guest Blog – Ultimate Finance
Guest Blog – Ultimate Finance Ultimate Finance is a specialist asset-based lender that provides a wide range of flexible solutions to support the ambitions of UK businesses. Part of international private investment company Tavistock Group, Ultimate Finance has offices in Leeds, Bristol, Manchester, Lutterworth and Edinburgh. Ultimate Finance currently supports over 2,500 businesses with flexible funding solutions to help realise potential through unlocking working capital, funding the purchase of assets and easing cashflow challenges. In 2020 Ultimate provided over £1.5bn in funding to their clients. THE ROLE OF THE BROKER IN A RECOVERING ECONOMY Faced with a constantly changing and uncertain environment for families, health, the economy and businesses right now, juggling priorities is a huge challenge for most of the UK. With the vaccine roll out picking up pace it offers a great deal of optimism despite some of the harrowing statistics we are still faced with and in particular for those families who have lost loved ones. With the country adjusting to leaving the EU and the changes that brings, and the government support schemes changing or coming to an end over the coming months, the Chancellor’s budget in early March should provide some element of certainty or at least more insight to a recovery plan for UK businesses. SMEs are at the heart of the economy and supporting them through their recovery and revival stage is going to be extremely important for lenders and specialist advisors. The role of the advisor/broker/accountant has, like many other jobs in the last year, had to adapt quickly to understand the government funding schemes, and whether they are the right option for businesses versus more traditional lending. With so many lenders in the market, these specialist advisors will continue to have a vital role to play in helping businesses with their cashflow and liquidity challenges by offering advice and support in finding the funding to support their plans. In helping businesses find the right funding, at the right time, advisors will give business owners the confidence that they are making the right funding decisions. This could be advising and facilitating refinancing of CBILS loans, refinancing of assets, structuring HMRC repayments, or providing working capital finance through invoice discounting, or specialist products such as Construction Finance. Businesses must give themselves not only short-term support, but an ability to flourish in the medium to long term without the constraints of a cashflow headache on a weekly or monthly basis. Ultimate Finance values it’s relationships with commercial finance brokers and feels they are going to be hugely important in keeping business moving in 2021 and beyond. In this regard we will work closely and in partnership to provide the best funding solution possible, through fast, commercial and flexible decision making, and the added value of a proper relationship to both business owner and broker. Written by Michael Beer, Regional Director at Ultimate Finance https://ultimatefinance.co.uk/
Transport & Logistics Company – Case Study
Transport & Logistics Company – Case Study Recently one of our network partners was approached by a transport and logistics company, with depots in Suffolk and Glasgow. The Glasgow depot was a specialist cold storage depot used for storing principally frozen fish a new service being offered by the clients’ business as a specific response to the possible adverse impact due to Brexit. The client entered in to a 2-year lease in 2019 with the landlord. The lease included an option for our client to purchase the target property at £1.2m, this being the value of the target asset in 2018, when the landlord was looking to rent/sell the asset. When our client was in a position to purchase the Target Property (November/December 2020) due to the improvement works undertaken by our client since occupation and an improvement in market conditions for assets of this nature the target asset had increased in value to £1.5m. The client approached Brokerplan Partner Mark Everard of Michaels Commercial Finance as they needed the help of someone with commercial finance knowledge to assist them in identifying a source of funding to purchase the target property, at the pre-agreed price of £1.2m as per the lease agreement, after having struggled to secure the required funding from the clients’ own bank. After the client reached out, our Brokerplan Partner contacted Head Office to discuss the proposal with our Senior Case Manager – Peter Leonard Ideally, the client was looking for a 70% Commercial Mortgage assessed against the Vacant Possession Value of £1.5m, rather than against the Purchase Price of £1.2m. The issue is that a majority of commercial funders are only prepared to lend against the lower of Purchase Price or Valuation i.e. £1.2m. However, Aldermore are prepared to consider advancing 70% against the Vacant Possession value where the borrower is the existing tenant. Therefore, Aldermore were considered the most suitable fit given the clients funding requirements. However, whilst the rate was competitive, we wanted to provide the client with an option from a Tier 1 lender, we therefore made an approach to TSB and whilst the interest terms were lower than those secured with Aldermore, the maximum advance would be restricted to 70% of the Purchase Price i.e. £1.2m. This would require the client to find a further £210,000 deposit than compared with the offer from Aldermore. Having provided both options to the client, it was agreed to progress with the Indicative Terms received from Aldermore. Having provided Aldermore with the relevant information including Financials, Management Information including a list of the clients existing financial commitments. Formal credit approval was achieved within 7-working days which was subject to a number of conditions. Between the Client, the Brokerplan Partner and Head Office, these conditions were quickly satisfied allowing the case to complete within 6-weeks of achieving credit approval due to the close involvement of all parties including the respective legal advisers from both sides. This case generated a total of £10,500 in commissions, but more crucially has now allowed the client to move forward, in the knowledge that the purchase of the property has secured the long-term future of the business as well as annual saving in excess of £60,000 per annum being the difference between the annual rent and the annual commercial mortgage payments. To find out how you too can become a successful commercial broker email info@brokerplan.co.uk to receive our brochure or call 0333 405 6666 to speak to a member of our business development team.
A Year of Virtual Training
A Year of Virtual Training This year has brought about many changes in the way we work, the shift to remote working has been a learning experience here at Brokerplan. The need to adapt the way we train and educate our partners has caused us to drastically shift our software and processes. A year ago, in March 2020, we held what was to be our final in-person training course at our head offices in Selby, North Yorkshire. After the lockdown was announced we suddenly had to explore new avenues as to how we could continue to train our new partners whilst there were restrictions on physical visits to the office. Luckily, we already had access to a virtual meeting facility that we had been using for our weekly lender webinars for established partners. Adapting this software to enable us to provide an in-depth training course spanning multiple days would prove to be quite the challenge, and has been an ongoing process of trial and improvement, as our business development manager Laura Fieldhouse explains: “We very quickly realised that we would have to change the format of the training for it to work online. We spread the training over five afternoon sessions, instead of training intensively for 2 and a half days. We created a workbook to guide people through the week and we have constantly asked for feedback. This has resulted in changes to the order of sessions, changes to breaks and also development of the content to make the training as enjoyable and interactive as possible!” Laura Fieldhouse Business Development Manager Our comprehensive business training covers FCA regulations and compliance requirements Business procedures & administration essentials Core commercial product training Lead generation and business development How to use our bespoke sourcing system ‘Lender Hub’ The fundamentals of case underwriting Developing Ancillary / Additional Revenue Streams Business Planning, Forecasting and Budgeting Want to learn more about Brokerplan? Call: 0333 405 6666 or Email: info@brokerplan.co.uk
Recent Deal Summaries
Recent Deal Summaries A recently completed deal, from one of our partners and it’s their first case. A bridging loan of £216,000 for a property development in Doncaster through Affirmative Finance landing them a £2,106 commission! Client had a property in a SIPP Pension that the beneficiaries wished to convert to and operate as a coffee shop, we managed to secure an asset finance loan with Eastern Credit to help the client with this project One of our partners recently secured a £340k Day 1 Development Bridge Loan for a client – Who’s project was a new build single dwelling. The deal with secured with lender Golden Tree. The commission generated on the deal was £3,400
Partner Closes First 2 Deals
Partner Closes First 2 Deals Martin Cook of Exel Finance is an AR that started with the network last year and even he won’t mind admitting that his has been a steep learning curve. He has however thrived from being able to self-manage some of his own cases and with a genuine dogged sense of never giving up this has helped him to close two deals that other brokers would have let slide. An established property development company in Lancashire A property development company that needed to obtain a loan as a result of sales of new build homes being delayed. The development project consisted of 3 high quality executive homes that had experienced massive delays due to COVID. They had received an offer of a CBILs loan from Oak North but the terms required 90% of the loan to be repaid on the sale of the first home, which was at that point only about one month away, which was not acceptable to the company. Martin read that Merchant Money might be willing to consider a CBILs loan on better terms and put an application to them for a secured CBILS loan. Martin received the support of Nick Newton, the BDM and also the CEO of Merchant Money who requested a zoom call with Martin to review the application. The loan was offered and completed quickly and gave the clients the £330,000 they needed. This was such a ground breaking loan for Merchant Money that as a result of this loan case they created a new product based on a developer exit bridge and have successfully gone to market with this. An established construction company in Lancashire This company was referred to Martin having approached their own bank, HSBC, for a CBILs loan. The bank’s decision was that the client could not afford to service a CBILs loan because of a loss in their latest accounts. Reverting with projections of contracts secured and a positive cash flow projection, the bank then concluded that the client didn’t need a CBILs loan! That is when Martin got involved. The case was Presented to 3 lenders: Iwoca, Funding Circle and Nucleus, who each in turn declined the case. Martin presented the case again to Merchant Money backed up with facts and figures as to why the company’s loss was not an accurate indication of its past trading history or future potential. Many questions were asked and Martin responded to every question and query put to him by the underwriters thoroughly and completely which eventually persuaded the lender to take a view and finally the credit team approved the loan for £250K. The client was delighted. Both the above were CBILS business loans that completed with Merchant Money and in the words of Nick Newton their BDM “ …. it really Is worth highlighting Martin’s efforts on these – even my underwriter commented on the thoroughness of answers and the overall packaging and I’ve never heard him say anything positive!” In addition, it’s worth noting that both the deals had a broker fee charged to the client on top of the lender’s procuration fee and a very healthy combined income on both these deals was achieved.
Recent Case Studies
Recent Case Studies £30k Scaffolding Deal Deal placed with Bibby Financial Services Established scaffolding contractor trading 17 years needed additional scaffolding to help service pipeline of work. The business did make a loss in 2020 but latest management figures show a turnaround back to profitability, balance sheet remains strong, directors have clean credit searches and are homeowners. The deal was accepted on 3+33 profile with DG’s from both directors at our scaffolding rate net 14%. Documents were emailed for signing and once the originals were received and the client confirmed they had received all the goods on site and was happy for payment to be release both the broker and supplier were paid by same day transfer. Partner Commission £3,000
Regulated Bridging Case Study
Regulated Bridging Case Study The client already owned a property unencumbered, which was valued at £170,000 and wanted to spend £100,000 making it her forever home. However, the anticipated GDV was £210,000, so the maths didn’t really work. The client had already approached other brokers but weren’t happy with the rates received. Part of the application, would be to add her partner to the deeds. He had an unsatisfied CCJ, which also had to be taken into account. The introducer had already secured an AIP for the exit. After several rejections, West One Loans, could see the bigger picture and understand that the deal would work as the total borrowing was still relatively low loan to value. We secured terms at 0.9% per month and the case completed on 17th November, much to the applicants delight. Great support from Mark Hedley and Simon Boghurst at West One to a successful completion.
Canary Wharf BTL
Canary Wharf BTL Limited company application for the purchase of a BTL in Canary Wharf completed with the support of Landbay. The clients were first-time landlords and had purchased the property off-plan with a completion date set for March 2020. This had a restricted lender panel as the property was a new build in a block with 42 stories. The purchase price was £960,000 and a 20% deposit had been paid. Due to the rental income and restrictions applied following the coronavirus outbreak, the maximum loan available was £720,000 and the applicants had to increase their contribution. Following the valuation, the rental income was reduced from an anticipated £3500 to £2850 pcm. The lender then applied an additional restriction as they were first-time landlords and increased the stress test to 135% at pay rate as opposed to 125% which would have made the purchase impossible. The applicant has managed her father’s properties for some time and, as a compromise, the lender accepted confirmation that she had experience from this as an exception and reverted back to the originally agreed sum. Additional requirements: EWS1 form as the property is a block of flats (new legislation following the Grenfell disaster) Reinspection to ensure all works were complete prior to completion There were delays due to the lockdown and the building wasn’t completed until October. The original enquiry came in in December 2019.
£14k in a Week with Bridging Finance
£14k in a Week with Bridging Finance One of Brokerplan’s established partners Mark Everard of Michael’s Commercial Finance closed three bridging finance deals last week which earned them £13,829.50 in net income! These cases included: A regulated bridge for an elderly couple looking to downsize and move closer to their children – Their current property had not yet been sold and so the existing property and the new property were taken as security. This allowed them to secure better rates with a reduced loan-to-value (LTV) and allowed them to use the sale of the existing property as the repayment for the loan. Income – Broker Fee £1,500 & Proc Fee £4,009 A property purchase at auction with the client’s existing property portfolio to be used as additional security on the loan. With the client needing to complete within 3 weeks or risking losing the property, timing was key. The facility was arranged and completed within the given timescales and the client was able to continue with the purchase. Income – Broker Fee £2,469 & Proc Fee £5,292 A regulated ‘bridge-to-refurb’ on the client’s current property and use as a buy-to-let, A bridging loan was secured to finish off the refurbishment of the property and also provided the client with money for the deposit on their dream home. Income – Broker Fee £1,200 & Proc Fee £1,800 All of the above deals completed last week came to a total of £16,270 and provided the AR with a net income of £13,829.50! To find out how you too can become a successful commercial broker email info@brokerplan.co.uk to receive our brochure or call 0333 405 6666 to speak to a member of our business development team
Waterloo Lodge Re-Finance
Waterloo Lodge Re-Finance Refinance of a stunning holiday home in Scotland to raise funds to build additional similar properties. The security is a timber framed wooden clad holiday home in a relatively remote area on the West coast of Scotland. Bookings have always been good but this came to us at the start of a global pandemic, luckily this hasn’t had a lasting effect due to the staycation market. The client is an ex-pat living in the USA and he had previously lived in the property. Cambridge and Counties could see the potential in the project and were fully supportive from day 1. There were some complications and the client had to produce a lot of documentation before it went to offer as he was overseas. Cambridge and Counties originally offered a loan of £250,000 against a valuation of £450,000 but were able to increase that to £270,000 following underwriting. The client was offered and accepted terms of 4.5% OBR with a 2% arrangement fee. The AR charged 1.25% for his work which started in April and involved a lot of contact with the client at inconvenient times due to his overseas location. The total gross income was £6075.
