Dear Introducer,

We have just suffered the coldest Winter for 30 years and signs that Spring is almost here are starting to be seen. The country is now officially out of recession and signs of economic growth are starting to show, but very slowly, slower than the appearance of later than usual daffodils, that's for sure! In the current economic climate, the banks are relying on the loyalty of their customers and in return are charging more! We at Safeguard Commercial Finance Limited have seen examples of banks charging margins at over 4.25% when lower rates are regularly negotiated by ourselves for our clients. Loyalty between banks and customers tends to be one sided. There has never been a more appropriate time for businesses to contact a broker if they are looking to borrow money.

COMMERCIAL FINANCE

Lenders still have a tight grip on their cash and show no signs of relaxing their lending criteria. In fact, they have increased their lending margins lately making borrowing more expensive even though interest rates remain at 0.5% above Bank of England base rate. Interestingly though, the banks which received taxpayers funds to survive have admitted that they did not meet the lending targets they set themselves in 2009. Hopefully, they will change their ways and look to assist the growth of the country's economy. We are continually looking to increase the number of lenders we have working relationships with and now have a lender who offers a 2 year interest only period on commercial mortgages. The maximum loan to value is 60% and early repayment charges apply. Please note that the leisure industry is excluded. In previous newsletters it has been mentioned that Safeguard Commercial Finance are able to raise cash by refinancing assets. However, at present although it is still possible, the values of the assets may not be what the client had in mind as lenders look at the reduced resale value. Unencumbered assets can be used as deposit for the purchase of additional equipment subject to their value giving the client the option of keeping cash for the day to day running of the business. Assets which tend to keep their value are coaches, cranes, manufacturing equipment and print presses.

DEVELOPMENT FINANCE

At Safeguard Commercial Finance we have received several enquiries lately about Development Finance, is it available? is a deposit required? what are the restrictions? We have a few specialist development funders we can approach, as at the moment the High Street banks are not interested with one saying they will only look at projects for existing customers, and others saying they are not interested at all. As a result, the specialist lenders are extremely busy, and as they only have limited finds, they have increased their rates and fees and now often charge exit fees based on the end value of the development. Also, they can now cherrypick which deals to fund. The two most important points at the moment are the experience of the developer and the exit route. Maximum loan to gross development value varies from lender to lender from 50% up to 70% but this includes the rolled up interest. The interest rate depends on the deal and the lower loan to value the better the interest rate. They prefer developments of up to 6 houses with completion within 12 months and all properties sold within 18 maximum. Finance for flats and commercial property is still very difficult.

ANY QUERIES?

If you have a client requiring finance for the purchase of, or refinance of, property or assets, please contact us, our details are on the right. Alan Wigham