Development Finance
If you’re a property developer, investor, or landlord, there’s a range of finance available to help you kick-start your next project. But even for experienced developers, the alternative lending market can feel large and complex.
When it comes to Development Finance, our brokers can assist you in almost any sector, including Offices, Retail, Industrial, Hotel, Residential Investment and Development.
Our team of experienced experts maintain well-established relationships at the highest levels within the banks and funds who are actively lending.
Client’s seeking this type of finance typically includes Private Property Companies, Family Offices, Overseas Investors, Wealth Managers or Opportunity Funds.
Each enquiry is sourced, underwritten & considered on a case-by-case basis.
Loans available from £50,000 to uncapped amounts.
Residential Development
Our broker has access to a number of high-leverage lenders who provide Residential Development Finance up to 75% LTGDV, and will charge around 11% pa, with a 1% arrangement fee and 1% exit fee.
We also have access to a wider pool of lenders who will fund up to 70% LTGDV, charging around 10% pa, and with similar arrangement and exit fees.
Leverage in either of the above scenarios is restricted by the ‘loan to cost’ which cannot exceed 90% of total costs.
We then have other lenders who will fund between 50% to 60% LTGDV and they will charge somewhere between 5.5% to 8% pa.
Commercial Development
In respect of Commercial Development, there are a smaller pool of lenders to currently fund these schemes, and the majority require a ‘Pre-Let’ in place prior to lender commitment.
These lenders usually provide an interest roll-up facility within their gross loan and depending on size of the scheme, typically a term of up to 24 months.
In terms of recourse, most of the lenders require a minimum Cost Overrun and Interest Shortfall Guarantee.
Case Studies
Below are a selection of deals recently financed by our providers, to give an idea of how Black Book will be able to assist you, to assist your Client.
Case Study 01
Development – 15 luxury apartments
Location – London
Total loan amount – £23m
Loan to Cost (“LTC”) – 80%
Interest Rate – 11% pa
Client – Private UK developer
Summary – High leverage competitive finance achieved for the client, enabling him to purchase 3 HMO’s and then develop them into 15 luxury apartments the necessary planning permission had been obtained.
Case Study 02
Development – 2 Purpose-Built Student Accommodations
Location – Birmingham and Glasgow
Total Debt Amount – £26m
LTC – 60%
Interest Rate – 3.5% pa
Client – Offshore private family
Summary – The client acquired a site with planning for a 329 bed student accommodation in Birmingham and a 416 bed scheme in Glasgow. A competitively priced development facility was secured, which will roll into a 4-year investment facility, providing the client with the required time to stabilise the income.
Case Study 03
Short Term Loan – Private Rental Sector
Location – Zone 3, London
Total Debt Amount – £24m
LTV – 65%
Interest Rate – 1% pm
Client – Overseas Family Office
Summary – The client owned an unencumbered, fully-let residential block and needed to raise capital quickly in order to fund another property acquisition. Despite a complex borrowing structure and a very tight timetable, a highly leveraged short term loan was secured within 3 weeks.
Case Study 04
Short Term Loan – Permitted Development Scheme
Location – Hampshire
Total Debt Amount – £5m
Loan to Purchase Price (“LTPP”) – 95%
Interest Rate – 0.8% pm
Client – UK Property developer
Summary – The client exchanged on a vacant office building and during a delayed completion he initiated a change of use under PDR. A short term facility was secured, based on the enhanced value achieved by the client between exchange and completion.
Case Study 05
Commercial Investment – Mixed Use Portfolio
Location – London & South East
Total Debt Amount – £40m
LTV- 60%
Interest Rate – 2.15%
Client – Overseas Family Office
Summary – The client sought to finance a large, multi-tenanted, mixed-use portfolio located throughout London & South East.
Business / Asset Finance
Asset finance is a type of lending that gives you access to business assets such as equipment, machinery and vehicles, or enables you to release cash from the value in assets you already own.
Asset finance to get new assets and equipment
Paying cash up front for brand new equipment or machinery can be expensive, and could be a risky move that causes cashflow problems. And some companies simply don’t have the working capital for a big purchase — that’s where equipment finance comes in.
Hire purchase
Hire purchase is a simple way to purchase an asset and spread the cost over time. You pay in instalments, which means the item appears on your balance sheet, and because you own the asset you’ll be responsible for maintenance and insurance costs — but you’ll also have full ownership of the item after the term ends.
Equipment leasing
The lender buys the asset you need, and rents it to you on a lease. That means you have it straight away, and only need a fraction of the total amount up front. Generally, you have to pay the first month’s rent, spreading the VAT over the whole period. At the end of the lease, you can either continue leasing the item, buy it outright at an agreed price (factoring in money already spent), upgrade to a new piece of equipment on a new lease, or simply return it.
Many businesses find leasing a good arrangement because as well as spreading the cost over time, you can adapt to your company’s situation. For example, say a delivery company leases a van, and at the end of the term business is booming — they could get a larger vehicle on a new lease, or a package deal for multiple vehicles.
Finance leases and capital leases
A finance lease, or capital lease, falls somewhere between hire purchase and equipment leasing. It’s a longer-term lease designed for most of the asset’s life.
You get full use of the asset and pay for the full value over time, but don’t technically own it — so it does not appear on your balance sheet. That means it’s possible to offset rental costs against profit and claim VAT — which could be tax-efficient depending on your situation.
Operating leases and contract hire
Operating leases, or contract hires, are a more familiar form of equipment leasing. An operating lease is basically a rental agreement with a set term, and maintenance will normally be handled by the lease company (or ‘lessor’). Like finance leases, an operating lease won’t appear on your balance sheet (which might confer some tax benefits), but operating leases can be cheaper because you don’t pay for the full value of the item.
Asset refinancing
Asset refinancing is the process of securing a loan against valuable items that your business owns, like buildings, vehicles or equipment. It’s a simple idea — if you can’t keep up payments on the loan, the lender takes the asset to recoup what’s owed. Because you’re effectively ‘unlocking’ cash, the amount you can borrow depends on the value of the assets involved. Asset-backed lending is sometimes used for debt consolidation.
Some lenders specialise in one particular area of asset refinance, while others can finance almost anything that has a resale value. There’s a wide range of asset finance products available, and it can be a very flexible arrangement. However, there are a few restrictions: usually the asset has to be critical to your operations, and it must also be removable so it can be taken as security for the loan.
Final thoughts
Asset finance is an area with lots of choice, whether you’re unlocking cash from items you own, or getting new equipment for your business. As with any form of finance, it’s important to bear in mind the timeframe, to make sure you’re only paying for what you need. And for finance leases and hire purchase particularly, you don’t want to be stuck making payments on an asset you no longer use.
Optimate Consulting through its brokers brings simple access to all types of Business Asset Finance for any Clients who own either established or start-up UK businesses.
We have access to a vast range of lenders, both large and boutique, who between them can cater for almost any business or asset finance requirement. Several niche lenders we access also operate ‘own-book’ lending, allowing even greater flexibility and superior acceptance levels. Any Vehicle for business use, including cars, lorries, boats or aircraft, or any Equipment for business use, including fixtures & fittings, software or lighting, can all be financed or refinanced.
There are many different types of Business Asset Finance – a (non-exhaustive) list includes; Asset-Backed Finance or Refinance, Hire Purchase, Leasing, Invoice Finance & Business Loans.
We have access to:
- Funding from £1,000+ (no upper limit).
- Pay Rates from 3%
- Products with no deposit required
- Terms of 1 to 10 years
- Individually-tailored finance solutions
- Spreading the cost of purchases – fixed monthly payments, instead of paying total equipment cost.
- Same-day decisions – leasing brings far quicker approvals than bank loans.
- Same-day pay-outs – lease transactions are paid out almost immediately.
- Ability to roll-in soft costs (e.g. delivery & installation, software etc).
- Lease payments are 100% tax deductible
- Specialist Aviation Finance
- Specialist Marine Finance
- All types of Business Assets considered
- Peace of mind – unlike overdraft facilities, leases cannot be withdrawn once active.
- Seasonal Payment Terms available
Tax Bill Funding
For Personal Tax, Corporation Tax or VAT bills
Optimate Consulting now brings access to Tax Bill Funding – with lenders who will pay the Tax Bill to HMRC directly; allowing you to then spread your payments over:
- 3 months for VAT bills (Min. bill = £100,000)
- 6, 10 or 12 months for Personal or Corporation Tax bills (Min. bill = £10,000)
Key Features:
- Unsecured borrowing, with no requirement for Personal Guarantees
- Flat Pay Rates, determined per application
- Min. 12 months trading (with one set of published accounts)
- Tax Bill no more than 2 months overdue
- Underwriting decision in 48 hours
- Each case individually underwritten, via credit search, Tax Bill and last published Accounts (inc. P&L and Balance Sheet)
The interest rate payable is determined by the amount to be funded, the number of repayments selected, and the underwriting decision.
The Small Print. Optimate Consulting Ltd is an administrative hub, processing client applications on behalf of our business partners. As a result of this, we are registered with the Information Commissioner’s Office. We are not regulated by the Financial Conduct Authority (FCA). We do not promote regulated products to the public or provide any form of financial advice on investments or pensions which are regulated by the FCA we will refer you to a suitably qualified person. Should you require Financial Advice, we recommend you contact your Financial Adviser. If you do not have a Financial Adviser we recommend you search the Financial Services Register to find an authorised firm that meets your requirements. If you require assistance on the completion of an application, please feel free to contact us. Optimate Consulting Ltd is a company registered in England and Wales company no.10249349, registered address Unit 8 & 9, Parsons Court, Welbury Way, Newton Aycliffe, County Durham DL5 6