How Term Loans can help solve financial issues 

Securing the right type of loan can be the difference between the success and failure of a project. One such financial tool that has become increasingly essential for property developers and investors alike is the Term Loan. A Term Loan provides a structured financial solution that allows borrowers to manage their cash flow, complete projects, or secure working capital when needed.  This article will explore the concept of Term Loans, the situations in which they can be used and how term loans for business can be used to address business financial issues.

Why might you need a Term Loan? 

Common uses 

Term loans are effective solutions for tackling various financial challenges. They provide the necessary funding to complete projects, manage cash flow and secure working capital.  

Planning and cash flow 

Term Loans can help businesses stabilise their cash flow, especially when dealing with seasonal fluctuations in revenue. By securing a Term Loan, a company can maintain operations and cover other expenses during slower periods. This financial stability is critical for long-term success, allowing businesses to focus on growth. 

Development projects 

Term Loans play a crucial role in residential and commercial development projects. By providing the necessary funds to complete projects on time and within budget, these loans help developers manage cash flow, reduce financial stress and focus on delivering high-quality results. 

For example, a developer who is facing delays in securing planning permissions might use a Term Loan to cover ongoing costs while waiting for approval. Therefore, this allows the developer to continue working without interruption, ensuring the project remains on schedule and profitable.  In addition, Term Loans can provide the capital needed to take advantage of new opportunities, such as purchasing additional land or expanding a project. This ability to act quickly and strategically can be the difference between a successful development and a missed opportunity. 

Commercial property 

Term Loans are flexible financial tools used for various purposes across different sectors. For commercial property, they are often used for purchase, renovations, or to supplement working capital to smooth out cash flow issues. 

A company might take out a Term Loan to upgrade or modify its facilities, enabling it to increase production and profitability. Without the ability to renovate and upgrade, many businesses can find themselves in a very frustrating situation. Term Loans provide an ideal solution to this particular problem. 

One excellent example of this situation arising was with an Italian dining establishment in Berkshire, where a bespoke financial solution was needed to improve the property. We were able to extend and restructure the loan over a three-year period to enable the restaurateur to solidify the profitability of the project. By collaborating with the borrower, we were able to create the ideal Term Loan for their exact requirements, which would have been unachievable with other loans.  

Alternative Term Loans 

Our Term Loans are typically used by companies to finance the purchase of property, and equipment, or to release working capital. The Alternative Term Loan is repaid over a fixed term, between three to five years with an LTV of up to 65% on first charge.  They can be secured on both residential and commercial property, including retail units, office buildings and many others.

Our Alternative Term Loans are now also available with no early repayment charges. 

Problems they can resolve

Alleviating issues with bespoke financing 

Clients seeking Term Loans often face several issues that these loans can help alleviate. One of the most common is the pressure of meeting tight deadlines, whether for project completion or financial obligations. A Term Loan can provide the necessary funds to keep a project on track, giving the time needed to meet planning requirements or finalise sales without compromising on quality or profitability. 

In one case, a borrower in North West London required more time to meet planning requirements for a development project. A 12-month facility was not sufficient for this situation as the borrower needed planning approval before commencing the construction. Fortunately, our Term Loan provided the ideal solution to this problem. This Term Loan was secured as a first charge across three different properties across North West London. The loan gave the borrower additional financial flexibility and addressed the frustrating time-based constraints. This Term Loan also allowed the borrower to release funds for refurbishments, further enhancing the property.  The loan allowed the borrower the additional time that a bridging loan wouldn’t be able to provide. 

This case shows how our customised interest-only Term Loans can help investors out of tricky financial situations. If you would like to read more of our Term Loan case studies, you can view them here. 

Conclusion 

Term Loans are a versatile and effective financial tool that can help individuals and businesses address a wide range of financial challenges. Whether it’s securing the capital needed to complete a project, managing cash flow, or consolidating debt. A term loan provides the financial stability necessary for long-term success. 

For property developers, Term Loans offer the flexibility to manage projects without delays. They ensure they can meet deadlines and achieve profitability. For businesses and property developers, Term Loans provide an ideal, flexible solution. 

If you have any questions about how a Term Loan can help you or your business, don’t hesitate to get in touch today.