INSIDE COMMERCIAL BRIDGING LOAN ( CBL )

Transcription

1 INSIDE N O I T A M INFOR COMMERCIAL BRIDGING LOAN ( CBL ) Guidance Notes for Brokers for standard Commercial Bridging Loan proposals and others which may be considered on merit as Specials

2 Alternative Bridging Corporation Limited and its sister companies has provided Commercial Bridging Loans for the past 25 years and has the capability to understand and progress some of the more complicated proposals. However, where there is complexity, the negotiation is often more demanding and may need more information and take a little longer to finalise but the result does justify the effort. We hope this Guidance Note will provide you with a better understanding of the product, our preferences and what information we need to get the job done efficiently. 1. Our Standard Criteria: a. We finance: First and Second Mortgages Retail, Commercial, Industrial, Residential Investment Owner-occupiers Property Investors and the Business Community Traders b. Our Minimum Loan Size is 150,000 and our maximum is 10M with a sweet spot between 1M and 3M c. The Maximum Period is 24 months d. The standard Loan to Value ( LTV ) is up to 65% but can be increased for well-let properties on long leases e. Loans over 5M are Specials - see Guidance Note 6 f. We lend in: England, Wales and Scotland Our BDMs are based in: London and Home Counties Birmingham and the Midlands Manchester and North West Bristol, Cardiff and South West g. Note: We do not lend against, farms, the short-lease and goodwill of retail businesses, operating filling stations, equestrian facilities, kennels and catteries, etc.

3 2. What makes us smile: Borrowers with a good track record (see Guidance Note 7) Loans over 0.5M but under 3.0M Locations with lots of chimney pots Proven income, e.g. well-let investments with a spread of tenants, profitable businesses, etc. A defined exit strategy, e.g. sale with agent instructed or refinance actively being negotiated 3. When we think twice: Remote and distant locations e.g. Scotland and rural Wales Loans under 250,000 Very short leases and doubtful tenants this may limit the loan to a percentage of vacant possession value Opco-PropCo structures Unusual properties, e.g. leisure facilities, country hotels Doubtful exit strategy Borrowers subject to PEP (Politically Exposed Persons) sanctions or who are resident abroad particularly those in high risk jurisdictions that intend to use funds originating in those jurisdictions to fully or part finance the transaction either at inception or at takeout 4. What we charge - Fees and Interest: a. Interest Rates are from 0.65% per month and are influenced by LTV, the size and period of the loan and the Procuration Fee ( PF ) to be paid to the broker b. Arrangement Fees and Procuration Fees ( PF ) i. Arrangement Fee 1%: No PF paid to broker ii. Arrangement Fee 2%: PF to broker 1% PF to broker 1.5% - 2% - refer to BDM for interest rate brokers only

4 5. Specials Loans ( Specials ): a. Specials are proposals outside of Standard Criteria and will be considered individually on merit. We will try to meet the requirement but may need more information b. Specials are subject to individual underwriting c. Sighting by Credit Committee is mandatory for all Specials d. If guidelines are to be broken, please identify and detail the justification for a Special, e.g. strong exit strategy such as a contracted sale, borrowers who have meaningful other assets and significant income e. Loans of less than 250,000 need to be simple and straightforward and are for borrowers with a clean credit history 6. Credit History: a. Clean Credit History assumes: No Unsatisfied County Court Judgements No Defaults or late mortgage payments Never disqualified from being a director of a limited company No history of bankruptcy or IVA/CVA b. Adverse Credit History: Where the assumption above is incorrect, please sight the proposal with full details and explanation 7. Valuation: a. ABC Underwriting will instruct each valuation b. We reserve the right to decline a previously instructed valuation unless it has been carried out by a firm on our panel or one we are prepared to add to that list. In all cases, we will reinstruct using our valuation instruction form c. We expect our valuers to be RICS members with at least four partners with an active, local sales and / or investment agency near to the property d. For loans of more than 2M, we will usually only instruct one of the national firms such as Savills, Strutt & Parker, Cluttons, KF, CBRE and JLL. Fees will be quoted on request

5 8. Solicitors Legal Due Diligence: a. ABC Underwriting will instruct one of our panel solicitors to investigate title and prepare the Loan Agreement, Legal Charge, etc. b. For commercial loans, we currently favour: Joelson Teacher Stern c. We will not agree to instruct the borrower s solicitor or one recommended by the introducer under any circumstances d. We will not lend unless the borrower is advised by a firm of solicitors regulated by the Law Society, with a minimum of three partners e. Fees are quoted individually based on the number of titles, leases, etc. f. The borrower s solicitor will be asked to give an undertaking for legal fees. Delay in providing funds to the borrower s solicitor will delay the undertaking being gven and commencement of the legal process 9. Further Advance ( Top-up ) and Loan Extension: a. We will consider a further advance (within criteria) following improvement of the property, new lettings, increase in rents, etc. b. Upon expiry of the loan, at our sole discretion, we will consider extending the period for repayment 10. Interest Retention: a. Unless proof of income can be provided (e.g. rental income from the property or audited accounts) demonstrating an ability to service interest monthly throughout the loan period, a retention will be made equal to the interest payable for loan period b. In the event of early repayment, the surplus will be refunded c. The advance including interest retention must be within LTV criteria brokers only

6 11. Gathering Information: Most delay mostly occurs due to inadequate or incorrect information. Please help us to avoid this by providing at outset: a. Fully completed Application Form, including Asset and Liability Statement (available to download or complete on-line) b. Tenancy Schedule (available to download or complete on-line) c. Accounts and Balance Sheet of trading businesses personal borrowers (not corporate) d. Accepted Heads of Terms prior to our solicitor or valuer being instructed e. Estate Agent s details or previous valuation (for information only) (see Guidance Note 7)

7 INSIDE N O I T A M INFOR ALTERNATIVE BRIDGING 2 Imperial Place Maxwell Road Borehamwood Hertfordshire WD6 1JN