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Retailer looking to acquire leasehold supermarket!

This is the next in a series of blogs, where I’m telling the stories behind some of the recent deals we’ve done.

They’ll give you an insight into the types of funding we can arrange, and help you understand exactly how we’ve assisted some of our clients get business finance.

This week, we’re looking at a highly experienced retailer, planning to acquire a very successful mini-supermarket business.

The only problem was the business was trading from leasehold premises, which our client subsequently discovered presented a problem to potential lenders.

Was there anything we could do to help?

So, funding required to help our client acquire a leasehold mini-supermarket. Here’s what happened……

The Background To The Deal

  • Our client was an extremely experienced retailer having been in the retail trade for many years.
  • An opportunity had arisen to expand his business activities by acquiring a new mini-supermarket business.
  • The new business was very successful, turning over £40,000 per week; and our client had a number of ideas for developing the business and thus increasing the turnover.
  • The vendor was keen to sell and there were several interested parties. As a result, our client felt he needed to move quickly.
  • Could we help?

What Were The Problems?

There was one main problem:

  • This was an excellent business and our client didn’t want to miss out on what was a great opportunity to expand.
  • However, the mini-supermarket he was looking to acquire was operating from leasehold premises.
  • And that was the problem! Because it wasn’t a freehold property, the lenders he’d approached simply wouldn’t consider funding.
  • As a result, our client hadn’t been able to obtain the funding he needed despite approaching several lenders including his own bank.

How Did We Solve the Problems?

  • Our client required a loan of £295,000 to enable him to complete the purchase.
  • The business operated from leasehold premises with only 12 years remaining on the lease.
  • No freehold security was available, and this had created the difficulties our client was now experiencing in trying to raise finance.
  • The first thing we did was meet our client. We call this meeting our DEEP DIVE EVALUATION and is arguably the most important thing we do.
  • During that initial meeting we take the time to completely understand our clients funding requirements and as a result suggest possible solutions.
  • Having understood both the deal, and our clients funding requirements; we approached one of our lenders who deals specifically with leasehold finance.
  • Following a meeting with the client, a valuation of the business was carried out, at which point the lender agreed to assist our client with the required funding of £295,000.

What Were The Benefits To Our Client?

  • Our client had approached a number of lenders who had declined to assist because of the leasehold nature of the transaction.
  • However, our client saw this business as an excellent trading opportunity and was determined to proceed with the purchase.
  • The key benefit we offered was that we introduced him to a lender who understood funding to leasehold businesses.
  • As a result, we arranged funding of £295,000 over a 7-year term.
  • The loan was ideal for our client and enabled him to successfully complete the purchase.
  • He has now moved in, is trading successfully, and already increasing the turnover!

In Summary

  • Deals come in all shapes and sizes – including leasehold businesses.
  • Many lenders like the security of a freehold property but the fact is many very successful businesses throughout the UK operate from leasehold premises. And they need funding too!
  • Which only goes to prove that having good access to alternative funding options is vital.
  • This deal was a case in point – our client needed £295,000 so he could acquire a very successful mini-supermarket

Result? One very happy client!!