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If you refinanced, or secured new finance three to five years ago, you are likely to have a mortgage with an interest rate margin that is particularly attractive. A number of home owners are probably fortunate enough to have a rate as low as 1-1.5% over base rate!

It is, however, unfortunate that many of the loans at these margins are likely to be due for renewal in the next 12 to 24 months and, with the economic climate as it is, there is unlikely to be a facility available on these type of terms.

For the past few years, it has been a case of making sure you do not breach any bank covenants, and sitting tight to make sure you do not have a change of terms before repayment of the loan. This has prohibited many people developing/restructuring their business to make them more tax efficient. 

But maybe, just maybe, the time is approaching to start looking at how best to move forward.

We all know about the press coverage that says banks are not lending as much money as the Government want them to. That said, healthcare is a relatively attractive place for the banks and if your asset is a good quality home and well run, it should be something that is seen as an opportunity by your current bank or lender. 

So what makes us think now might be a good time to think about refinancing, when you have a low interest rate margin?

Many banks are participating in the Government-run National Loan Guarantee Scheme (NLGS), a scheme designed to give businesses (with turnover of up to £50m, and that will be the vast majority of care businesses) access to cheaper finance, with reductions in interest rates of 1% on loan facilities.  The reduction is being offered by bankers in different ways – some are suggesting a discount over a period of time in the form of up-front cash-back, whilst others are offering a straight reduction in the interest rate over a period of time.

This one percent reduction may just be the catalyst to getting a deal that works for you.

In addition to the NLGS, certain banks are also involved in the Regional Growth Fund which is another Government initiative, whereby there are funds to distribute to small and medium sized businesses that have insufficient deposit contribution for investment in assets whilst creating or safeguarding jobs.  We suggest that this could be applicable when buying a new business or extending/refurbishing a home. In addition, it might apply if you have limited assets available as security for the bank.

It is our view that now is the time to start thinking about the renewal of your bank facility and making sure that you secure the best deal. With the economic turmoil in Europe and the rest of the world, very careful consideration needs to be given to what is right and we have helped a number of clients with their funding to secure their future or to take advantage of opportunities to grow their business.