Case study: Being flexible with a bridging exit

In this instance, the purpose of the loan, made to a business couple, was to facilitate the purchase by the wife of 50% of the shares in a company in which the husband already owned the other 50%, thereby giving them complete ownership of the company.

United Trust Bank took a first charge over the borrowers’ home as security for the loan. However, the borrowers’ expected (and preferred) repayment route was from the sale of a shareholding in another company. The borrowers did, however, have plenty of equity in their large home and were open downsizing if it became necessary to exit the bridging loan by selling their property rather than the shares.

As ever, when considering a short-term loan, there must always be a critical focus on the exit strategy and in this case the borrowers were fortunate to have two exit routes available. However, it’s also worth remembering that while the lender will want to be satisfied that a viable exit is available, there is no compulsion for the borrower to repay by that route if a more preferable alternative becomes available within the term. Indeed, these particular borrowers may well find a third way to repay the facility without downsizing or selling their other shares.

That’s one of the great attributes of short-term secured loans. They are flexible on the way in and on the way out.

Loan details

Amount: circa £410,000
Loan-to-value: 27%