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£1.5m CBILS Development Loan

The CBILS scheme was slow off the ground when it came to helping property developers but when approached at the end of June by a long-standing client of the practice who needed a marketing bridge, we looked at which lenders would support.

Fortunately, United Trust Bank had just opened its doors to property developers impacted by Covid, giving them the ability to borrow monies to either build or sell a recent build on a “marketing bridge” with the 1st 12 months interest costs covered by the CBILS scheme.

For our client, 9 houses had been built but sales had stalled due to Covid and the £1.4m debt that had accumulated in building the properties was just about to time out and the client would now have to start servicing it.

White Rose Finance arranged for a £1.5m facility to redeem the full debt, payback a £50k bounce back loan and give the client £25k for liquidity reasons.

The facility had a few ups and downs, primarily, the bank overspending and so closing the doors after a week.  Then secondly, reneging on their original terms and offering the client only 1/3 of the debt covered by CBILS which we ultimately got overturned so eventually…. the full facility was covered by CBILS.

This meant that the full interest for 12 months, the arrangement fee and the legal fees were covered which totalled a saving to the client of circa £120,000 on the year as opposed to if the client had not gone through the CBILS scheme.

In addition, the bank remains open to the client being able to hold back some of the proceeds of the sales of each property when they sell rather than requiring 100% sales proceeds on each deed of release – to help the client’s liquidity on their next project. And, we are also looking into the client’s next project.

The loan completed in early September with a broker fee of 1% – £15,000 which was added to the loan.