Our client, a husband-and-wife partnership, has spent the last 40 years successfully growing their food-led hospitality business with a small B&B property adjoining, which plays a large part in the Lincolnshire tourism economy. The impact of COVID closing down their business overnight, required them to completely restructure the business finances as they could no longer afford the monthly repayments for their commercial mortgage and working capital facility.
Our intervention identified their eligibility for a remortgage under the CBILS wrapper, but the debt serviceability could only be met with a 25-year term. The age of our clients meant a term could only extend to 20 years. We discussed their succession planning options, and they decided to bring forward their plans of making their daughter the third partner, so enabling them to take advantage of the longer-term mortgage.
Their application was not a smooth one, however. Initially they were declined due to an adverse credit score. As with many businesses, they had opted for a 6-month repayment holiday at the beginning of the pandemic. Their lender incorrectly registered the repayment holiday as arrears, so having a detrimental effect on their credit score. We identified this anomaly and supported the client in resolving this, turning the decline into an approval.
Our support has meant our client can continue with their family business, despite the long-lasting restrictions experienced by the hospitality sector. This resulted in much improved monthly repayments, firstly reduced by 70% and secondly under the CBILS wrapper, no payments were required for the next 12 months. Furthermore, this significant reduction still provides the same working capital facility through the remortgage. Without doubt, this approach to finance restructuring has allowed this long-standing family business to continue to operate, rather than close its doors forever.