Bridging Loan Funds Guest House Acquisition, Structured for Term Refinance
What was the situation?
Our client, an experienced buy-to-let portfolio landlord with a background in hospitality and a strong financial position, identified a ten-bedroom guest house on the East Coast available for acquisition.
Already trading and in turnkey condition, the property offered our client the rare opportunity to take on an established, fully operational business from day one, rather than starting from scratch or managing works before trading could begin. The purchase price was £900,000, with our client seeking a net loan of £375,000 through a limited company structure, alongside plans to live within part of the property himself.
What was the issue?
The guest house was already generating income, but the vendor had never operated it through formal company accounts, and the figures available did not reflect the business’s full trading potential. Without an evidenced trading history, this was not a case that fitted standard lending criteria.
A further layer of complexity came from our client’s intention to occupy part of the property. Although the living quarters accounted for less than a quarter of the asset’s value and floor space, this raised the question of whether the facility would need to be treated as regulated, narrowing the pool of lenders able to consider the case. The property’s coastal location added a further point of scrutiny for any lender assessing the security.
What was the process?
Romit Patel, Associate Director – Specialist Finance, identified a lender able to accommodate either a regulated or unregulated outcome, giving certainty the facility would stand whichever way the position was ultimately assessed, and protecting the transaction from any last-minute change of course once underway.
Romit’s market knowledge ensured the coastal location and living arrangement were addressed with the lender from the outset, rather than potentially surfacing as concerns later in the process. He structured the facility with loan repayments wrapped in, protecting our client’s cash flow through the critical early months of ownership, and negotiated terms with no exit charges, preserving full flexibility to refinance the moment a suitable term lender was identified.
What was the solution?
Our client acquired the guest house within the agreed three-month timescale, structured as a 15-month bridging facility: 12 months to operate the business and establish a genuine trading history, and a further three months to generate company accounts and refinance to a term loan.
The wrapped repayment structure preserved cash flow through the initial trading period, giving our client the space to build that trading history and prepare proper company accounts. With no exit charges attached to the bridge, our client retains complete flexibility to move to a term loan as soon as the refinance window opens, on terms that reflect the guest house’s true earning potential.
This case turned on reading a business’s real earning potential and placing it with a lender equipped to assess it properly, rather than relying on unproven historic figures alone.
It’s the kind of specialist expertise LDN brings to complex acquisitions across hospitality, commercial and mixed-use property.
Need help securing bridging finance? Our experts are on hand to assist. Call 020 3903 9875 to speak to an adviser, or use our online contact form.
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