Background
Having used Pegasus Funding previously to deliver commercial finance, when ‘Chris X’ needed access to funding again, he reached out to Pegasus Funding once more.
His previous funding conundrum was that he faced a short-term funding gap, but with a weak balance sheet, he found it difficult to get the funding he needed from traditional lending sources.
Pegasus introduced Chris to a specialist funder, from where he obtained appropriate funding, which improved the cash flow of the business and allowed it to grow accordingly.
The next chapter
Chris has an elderly family friend, referred to as ‘auntie’, who lives in a home that Chris inherited. She is frail and receives 24-hour in-home care; the cost of which is very expensive.
In an effort to meet the costs of care, Chris had exhausted his own business capital, savings and pension pot very quickly. Understandably, the situation was causing him a great deal of stress; particularly as the available funding was running out and the in-home care needs are ongoing.
The challenges identified
He was unable to raise capital on the value of the property to cover the cost of the care from more traditional lenders due to the ‘reputational risk’ should they need to repossess it.
Although it is a somewhat long, complex and drawn out process, the decision was made to take the house out of trust. That would enable him to approach different funders and use the house as collateral.
Chris approached six different reputable lenders. Unfortunately, only a handful of lenders would lend on a property that is occupied by someone other than the owner of the property. However, with the relative due to move into a retirement home and the property sold, they could look at a bridging loan.
But while each of the funders was keen to help, only one could assist with the solution that was required.
The Pegasus solution
Chris was looking for £180,000 of bridging finance to help overcome his care provision issues; one of the most expensive methods of funding.
Having spoken with other brokers, they were all drawing a blank. The issue was that, by looking at more conventional solutions, they were finding that the funders were all nervous of the reputational risk involved should they need to repossess the property.
The Pegasus Funding Resources team talked through all available options with Chris and came up with a three-year loan term for him at a rate of 7.5% per annum. This was far less expensive than a typical bridging rate of more than 1.5% per month.
Following the initial approach to Pegasus Funding, an offer was made to the customer two days later and, within a week of accepting the offer, the customer had the much-needed funds in his account.
Benefits for the customer
Pegasus Funding was able to resolve a situation which was becoming increasingly stressful for Chris.
By concentrating on the options that were available, Pegasus delivered a rapid and robust solution to a tricky situation.
In addition to the extremely favourable interest terms, Chris has the option to pay off the loan, without penalty, if the property is sold earlier than expected. And, the way that loan was structured also means that it will not show up on his credit record.
What Chris said…
“I was impressed with Richard’s ‘can do’ attitude. He concentrated on what he could do, not on what he could not. My position changed overnight. One week later I had the money to ‘get out of jail’.
“Richard had achieved in one week what six reputable finance houses had failed to complete after several months, in a process which started back in February.
“Richard was a pleasure to deal with and, although the terms of the solution were tough, it has saved me money. The original search was costly in terms of valuations as each of the potential providers had the property valued, but in the long run they were unable to help.”