Last week, we sat down with Ian Pask, one of our Sourced Franchisees and a commercial finance specialist, to talk about how you can raise funds to cover the upfront costs and deposits for projects. Ian says…
“It was great to meet so many franchisees at the Summit in January and in subsiquent conversations with several people I am being asked more and more how to raise funds for upfront costs, deposits and projects. Cash is king and its not easy to come buy.
In a challenging market, many investors will still spot opportunities and the ability to make money when others become cautious. You need a solution to help meet your goals.
Sourced circulate to their investor list ‘Sourced deals’ on a very regular basis and I have seen franchisees seeking investors to join with them or invest in their deals. I know this has been a successful way forward for many.
If your not wishing to look at this route for whatever reason and prefer go it alone there are other options you could explore.
Clearly you could consider a refinance of any property assetts held, commercial or residential where equity exists. This may provide a lump sum that could be used.
It may not be suitable for all as there will be affordability stress tests in place depending on lender and product that might not be met. This is particularly true now due to the steep rise in interest rates seen over the last months.
Refinancing is likely to be at a higher rate than your current loan and when taking a new loan, even on some variable rates, there will be early reypayment charge (ERC’s) penalties for paying back early, increasing the overall interest rate.
Another option we have after speaking with several lenders is a ‘hunting facility’ and how this can put investors at a competitive advantage when trying to purchase under market value property that may become available in this climate. Investors that have other assets can use them to place a charge and have a facility pre-agreed. They do not pay interest until they draw the funds and like a credit card the funds can be drawn down and repaid as required.
We also know of a lender who specialises in second charge short term loans, can offer equitable charge loans, and can look to lend even when consent has been refused for a second charge by a current lender, lending on Open Market Value. This lender will also lend against a director’s main residence, even if it’s in the director’s personal name.
They will also consider a ‘valuation only’ loan which may be suitable for anyone turned down for borrowing by other lenders.
We work with our clients and funders on short term bridging, buy to let mortgages, property development, commercial mortgages and all sorts of business finance and are always available to chat. We may have a suitable product that meets your needs if we can learn more about you and your goals.
There is not a one loan fits all and the type of lending mentioned in this article is not suitable for everyone as all circumstances are different. If you would like to explore further how these options might work for you please get in touch.”
Ian Pask is a Sourced franchisee and commercial finance specialist and can be contacted at [email protected] or on 07551 877705 / 0203 675 0969