Pension-led funding (PLF) – Hear it from the Horse’s Mouth!

The PLF Journey from two commercial finance broker’s perspectives.

Laurie used PLF himself to finance his business…and Nic used PLF to achieve development financing for his client.

Laurie Baugh – Rathstones Financial Ltd

Laurie Baugh had his heart set on running his own broker business after leaving his banking job. The all-too-familiar lack of finance stood in his way, but it was Pension-led funding that delivered the solution and the lasting benefits that confirmed Laurie had made the right decision.

Where did PLF come into the process?

“It was about making your pension work for you and ultimately having that control,” Laurie said. “On the day I received my funding, I managed to declare a dividend and pay off all my finance agreements. The investment from my pension secured my long-term cashflow.”

A perfect result for the Commercial Finance Packager who turned to Pension-led funding initially to help a client finance a property deal but decided the best way to understand the business funding possibilities, and become his own boss, was to go through the process himself.

But it was Laurie’s pension scheme, a legacy of seven years with the Royal Bank of Scotland, which proved key to financing his dream.

“As a broker a pension is one asset you are likely to have. Commercial property deals can take up to 18 months to two years to write. Starting up you probably have to fund yourself for 18 months. That is a challenge.”

“I see PLF as low risk because I’m in control of the money and want my pension fund to have it. It was by far the best option to do what I wanted,” he said.

Nic Franklin – Franklin Commercial Finance Ltd. 

It was a doddle!”

This is how Nic Franklin, described his experience of brokering a deal for his client utilising Pension-led funding.

The client came to Nic looking for a £650k development loan to build commercial premises on a site they had already purchased using their own cash via their development company, GDV £1.1m.

They had secured a 15-year pre-let to the Coop & the intention was to sell the investment on completion.

Nic had previously worked with this client, an experienced developer, over a number of years, and once fully briefed, carried out the usual due diligence, gathering the relevant information to assess the proposal. The wealth statements revealed that the directors both had significant private pension funds, totalling around £1.5m.

He approached four lenders for terms on a standard development loan basis and terms for a Pension-led funding facility.

The lenders responses fell well below the client’s requirement, which would only be achieved if the directors were willing to give security over other properties in addition to the development site.

So why did PLF work for the clients?

  • They were able to raise the full amount required.
  • The client had total control of the funds – they were able to draw down the full amount when they wanted it & there was no requirement for a building surveyor to monitor the scheme as there would have been with a bank-led facility.
  • The interest charges stayed “in-house” funding their pensions as opposed to a funder.

“Following that face to face meeting, The PLF team did all the running around, liaised directly with the clients & their IFA to arrange the facility whilst keeping me updated throughout the process.”

The client received all of the £650K of funding required.

“I wouldn’t hesitate to recommend or use Pension-led funding in the future. Not only was it a good experience and great outcome for my clients, but the process and professionalism from the team at PLF was second to none.”

If you would like to know more about how Pension-led funding might work for your business or your clients, contact our PLF specialist, Tom Whitlock at tom.whitlock@clifton-asset.co.uk or visit our website at www.pensionledfunding.com

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