We have been through some incredibly challenging times in the banking industry over the past year, the good news is that the market seems to be settling down. Indeed there are a number of lenders who are demonstrating a keenness to lend particularly to the care sector.
Historically, existing operators were able to negotiate excellent margins on their facilities, and banks are currently charging significantly higher margins. However we have base rates at record low levels and even with the increased margins there has never been a time when overall funding costs have been so low.
Many operators will have their facilities tied into a minimum rate, typically 5%. If you can refinance at say an overall cost of 3%, inclusive of margin, then you will make cash flow savings of £20,000 for every million pounds of borrowing.
Whilst you may have redemption penalties to pay and will have to carry the costs of the refinancing, the savings are large and the set up costs can quickly be recouped.
You may also wish to consider whether this is the time to look at fixing your funding costs to mitigate against any future base rate increases.
If you are considering an acquisition or looking to improve or extend your business then you may find that your lender has changed their criteria or are no longer lending this is the perfect time to look at alternative funding sources.
Disclaimer - Privacy Policy
Chandler & Co ©2009 Site Design by Inspire