Background – A family business in crisis
Haydens B&B is an eco-friendly, family-owned guest house and a great example of a family business refinance case study. Owned by Richard and Kate Hayden with support from Kate’s parents, John and Sheila Luck. The B&B opened in 2005 and was thriving until COVID-19 hit in 2020. Forced to close due to the pandemic with no income and a substantial commercial loan to repay, John Luck requested a loan payment holiday from his bank. The request was rejected, and the family had no choice but to make the hefty monthly loan repayments with a credit card. After Covid, John returned to his bank and asked to refinance the commercial loan incorporating their credit card debt. By this stage, the family had £114,000 outstanding on credit cards after using them for the monthly loan repayments and to meet the ongoing business costs. Unfortunately, the bank was unwilling to assist and said they could only help if the family missed a loan repayment. This option posed a significant risk to the family business. At this point, John Luck approached ASC for help.
The challenges of refinancing business debt
The B&B consists of two connected buildings. One building is freehold, whereas the second sits above a gallery and is a leasehold. For the leasehold section of the property, Allica’s solicitors, LA Law, required responses from the freeholder, who refused to engage. To get around this issue, we approached the solicitors who’d handled the original B&B purchase. They supplied the necessary information from their archives, and the deal was back on track! The final hurdle was providing evidence that the service charges were up to date, as the freeholder wouldn’t respond. However, we successfully argued that the B&B was technically up to date with the charges as the most recent invoice (from the previous year) had been paid. The bank accepted our argument and proceeded to lend the funds after many months of legal wrangles.
ASC’s Solution – 300k loan secured with Allica Bank
We secured a loan offer with Allica Bank for £300,000 – to repay the incumbent bank loan and clear all the family’s business debts. The loan was underwritten and agreed.
Outcome – A family B&B saved at the 11th hour
The loan completed just hours before the offer expiration. Had the offer expired, it’s doubtful that the family would have secured another loan and would have been forced to sell their business. This deal was far from straightforward. However, our help and perseverance, coupled with Allica and LA Law’s flexible approach, ensured the loan went through. With all credit card debt cleared and significantly lower monthly loan repayments, the family can now focus on getting the business back on its feet.
Client Testimonial
“The Covid years have been a financial disaster in hospitality generally. Despite significant freehold value, our bank for more than fifty years has been deaf to our requests for help for the last three years. We all feel that your joint efforts have, without exaggeration, saved our business. The twists and turns of recent weeks have been like living out the last chapter of the plot of a novel. Kelvin’s exceptional input to iron out the legal tangles, where our solicitor was impotent, deserves special mention. Without the successful completion of the Allica loan, we were literally facing bankruptcy, having used up all possible sources of short-term borrowing as well as most of a personal overdraft.” – John Luck
Why choose ASC for business finance?
We treat you as an individual and not as a form filling robot – and we won’t put you through to a call-centre. You can speak to an experienced local finance director who has the knowledge and ability to make decisions. There is no obligation to discuss your project with us, so contact your local director today for a free consultation.
