Why borrow through a company
Mortgage interest is deductible in full against rental profits in a company, which it is not for individual landlords. Profits can be retained and reinvested at corporation tax rates. Properties can be moved by selling the company's shares. And for developers, each project in its own special purpose vehicle (SPV) ring-fences the risk. Take tax advice; the right structure depends on your position.
What bridging lenders need from a company borrower
- The company: certificate of incorporation, articles, register of members and directors (Companies House does most of this). SIC codes for property investment or development are expected but a trading company can borrow too.
- Personal guarantees from the directors and usually from any shareholder with 20% or more. Typically for the full loan, sometimes capped at 25% of it. The guarantors take independent legal advice on the guarantee, which is a cost and a day or two.
- Source of deposit. Money going into the company from a director is a loan or share capital; the lender wants to see it arrive and where it came from.
- A bank account in the company's name, for the funds to be paid into and for the redemption to come out of.
- Debenture on some larger loans: a floating charge over the company's assets in addition to the charge on the property.
New SPV or existing company
A new SPV is fine and very common; the lender underwrites the directors and the property, not the company's trading history. An existing trading company can borrow, but the lender will look at its accounts and may prefer a clean SPV so the security is not tangled with a trading business.
Offshore and complex structures
Companies registered outside the UK, trusts, and layered holding structures are lent to by a smaller group of lenders, at a higher rate, and with more legal work. Overseas directors and shareholders similarly. Tell us early.
Does it change the terms?
Not the rate or LTV. It adds a few documents, the personal guarantees and the independent legal advice, and perhaps two or three days.
About the numbers on this page. Rates, fees and loan-to-values are typical market ranges for unregulated bridging in England, given so you can size a deal. They are not an offer. Your terms depend on the property, the exit, the lender and you.
Questions we get asked
Do I need to set up the company before I enquire?
No. Tell us you intend to borrow through a company and we will get terms on that basis. Set it up once terms are accepted; it takes a day online. The bank account takes longer, so start that early.
Will I have to give a personal guarantee?
Almost always. Lenders lend to companies on the strength of the people behind them. Some cap the guarantee at a percentage of the loan; we can ask.
Can a company with adverse credit borrow?
The company's history matters less than the directors'. A new SPV has no history; the directors' credit and experience are what the lender looks at.
Tell us the deal.
A few numbers and a postcode is enough for a first view. Indicative terms cost nothing and commit you to nothing.