Background
This case involved an experienced hostel operator who was already trading from part of a mixed-use commercial building. The client identified an opportunity to purchase the wider commercial property alongside the seller’s separate hostel business, with the acquisitions strategically structured across different tax years.
The long-term objective was for Noble to take over the running of the hotel once the existing tenant lease expires next July, before refinancing onto an owner-occupied commercial term loan.
Challenge
The case presented several complexities that made a traditional commercial mortgage unsuitable at the outset.
Key challenges included:
A previous broker had attempted to secure funding, but the mortgage application had already been declined by another lender
Standard commercial mortgage affordability was not achievable at the time of application
The client needed to acquire a commercial property within the same building they were already operating from as a hostel
Part of the overall strategy involved acquiring an additional hostel business from the seller in a separate tax year
The affordability required to support the long-term refinance relied on income from the new business acquisition, which had not yet completed and therefore could not initially be used by lenders
There was an existing tenant in place — Wee Hostels, until next July, delaying the transition to owner occupation
This meant a flexible short-term funding solution was required to allow the acquisition to proceed before the full business integration and refinance could take place.
Solution
We structured a 12-month commercial bridging facility with Allica Bank to provide the speed and flexibility required.
Key elements included:
Net loan amount of £300,000 with retained interest
12-month bridge facility secured against the commercial property
Funding used for the purchase of the commercial unit
Structuring the loan around the client’s future operating plans rather than current affordability alone
Aligning the bridge exit with the planned acquisition completion and operational takeover
The bridging loan enabled the client to proceed with the purchase immediately while allowing time for the wider business acquisition strategy to complete.
Outcome
The client successfully secured the commercial property purchase despite previous lending difficulties and affordability constraints.
As a result:
The acquisition was completed without relying on a declined commercial mortgage application
The transaction structure allowed the separate business acquisition to proceed in a later tax year
The bridge facility created time for Noble to take over operations once the current tenancy ends
A refinance onto an owner-occupied commercial term loan is planned following completion of the acquisition strategy
This case highlights how commercial bridging finance can provide an effective solution where traditional lending affordability does not yet reflect the full future trading position of a business acquisition.
Megan Davis
