Helping a corporate customer to purchase land in India
A businessman, for whom we had previously completed a development loan facility, approached us for a loan on behalf of another of his companies. The purpose was to fund a land purchase in India and provide some short-term working capital. The transaction was time critical.
The borrower company owned a property in the United Kingdom on which contracts for sale had been exchanged. Completion was due in three months and the proceeds were intended to repay the bridging loan. We undertook due diligence on the contract and on the third party buyer’s creditworthiness and ability to complete.
We found that the company’s existing borrowings on the property meant we could not use it as security for the loan, so one of the shareholders offered us a first charge on their home. We ensured the shareholder received independent legal advice and took personal guarantees from the principal shareholders, in addition to the first charge. In the end, the property sale completed earlier than expected and the bridging loan was repaid within three months.