The deal that shouldn't have worked
On paper, this looked challenging. A first-time developer seeking heavy refurbishment finance to convert a fully commercial property into a mixed-use scheme.
But that's not the whole story. The borrower was a contractor by trade, running their own construction business. They'd been pricing and delivering builds for years, so they understood costs in a way that first-time developers rarely do. That changed our view of the deal. They'd also secured full planning themselves, demonstrating commitment and reducing delivery risk.
What looked like a first-time developer on paper was actually an experienced builder ready to step up.
What we looked at differently
We focus on capability, not just credentials.
The property, a fully commercial retail asset in Chorley town centre, had full planning to convert it into two ground floor retail units and a 7-bed HMO on the upper floors.
The low leverage enabled us to back the borrower despite their lack of first-hand development experience. At 27% LTV day one and 60% LTGDV, there was significant headroom. The valuer noted a 2-month letting period for the HMO, supporting the exit strategy.
The experience question
The borrower’s contractor experience counts. Understanding the construction process, managing trades, controlling costs: these aren't learned from textbooks.
We secured credit approval on the basis of the borrower's transferable skills and the conservative loan structure.
The classification hurdle
The loan technically fell into heavy refurbishment due to the ratio of build costs to market value. The actual works, a conversion of commercial space to semi-commercial, were more modest than that label suggests. We allowed an exception based on leverage and borrower capability.
The Outcome
£372,000 facility. 14-month term. A contractor taking their first step into development, backed by a lender that sees experience in all its forms.
This deal was delivered by Hattie Hall, Credit Manager.
