How lenders lend to companies
When a company borrows, the lender takes a charge over the property and usually personal guarantees from the directors or the main shareholders, often anyone owning 25% or more. Some lenders also take a debenture, a charge over the company's other assets. The guarantors are assessed much as an individual borrower would be, including their credit history and experience.
A newly formed SPV with no trading history is normal for bridging. Lenders focus on the people behind it, the property and the exit. Companies with other trading activities, or complex group and offshore structures, can be considered by some lenders, but need more legal work and more documents.
Regulation and company borrowing
A loan to a limited company is not a regulated mortgage contract, even if a director or their family will live in the property. That does not mean every lender will proceed in that situation. Several lenders on our panel will not lend where the borrower or a relative lives, or will live, in the property, even through a company, so we check this before approaching them.
Personal guarantees are a serious commitment. If the company cannot repay, the lender can pursue the guarantors personally. Independent legal advice on any guarantee is usually required.
Setting up and documenting the SPV
Property SPVs commonly use standard industrial classification codes for buying, selling and letting property. Lenders and future buy-to-let lenders often look for these codes, and some refinance lenders only lend to companies set up purely to hold property. Take tax and accounting advice on whether a company structure suits you before buying.
Lenders will usually ask for the company's certificate of incorporation, its register of shareholders and directors, identification for each guarantor, and, for existing companies, recent accounts. Having these ready helps the legal process move quickly.
Arranging company bridging
We compare lenders on how they treat company and LLP borrowers, guarantee requirements, loan to value and terms, then approach those that fit with a clear case. Instant Quotes lets you choose a limited company, SPV or LLP as the borrower and shows lenders that lend to them, as a starting point. Final terms depend on each lender's valuation and checks.
Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
