Case Study: Complex First Charge Solution for Family-Run Nursery

TL;DR

A well-established day nursery in Hertfordshire needed urgent funding to replace an unsuitable short-term facility, meet payroll deadlines, and inject working capital to support growth. Somo structured and delivered a 12-month first charge bridging loan using third-party residential security.

Overview

• Location: Hertfordshire, UK

• Facility: 12-month first charge bridging loan

• Gross loan: £260,000 (net £218,270)

• Security: Director’s mother’s residential property (third-party security)

• LTV: 67%

• Purpose: Consolidate liabilities, redeem lifetime mortgage, working capital for wages and growth

The Challenge

The business required capital to clear an existing short-term facility, pay off a small amount of personal debt secured against family property and inject working capital to support growth and upcoming wage bills. Timing mattered - payroll deadlines were approaching and the existing facilities were no longer fit for purpose.

The complexity was the security. The collateral was a residential home owned by the director’s mother, not the borrowing company. This introduced third-party security and charge requirements, owner-occupier considerations, and an age profile outside standard criteria. The use of funds was also mixed: business working capital plus redemption of a personal lifetime mortgage.

Many lenders would decline this structure. However, the fundamentals were strong: an established trading business, clean credit, detailed profit projections, and solid residential security supported by strong comparable sales.

Somo’s Solution

Somo treated this as a structuring exercise, not a “no”. We focused on:

• clear documentation for third-party security and charge compliance

• addressing valuer queries with strong comparable evidence

• securing sign-off efficiently so completion could happen before payroll pressure escalated

The Deal

Somo delivered a 12-month first charge facility of £260,000 gross (£218,270 net), secured at 67% LTV against the security property.

The loan consolidated short-term liabilities, redeemed the lifetime mortgage and released capital back into the nursery at a critical moment.

Despite initial Valuer queries and the added layer of third-party security, the fundamentals were clear. With strong comparable evidence, third party charge compliance and funder sign-off secured, the deal progressed smoothly and efficiently to the delight of the business owners.

The Outcome

Funding completed in time to stabilise the business, remove unsuitable borrowing and protect family security. With profitability projections supporting refinance and clear forward planning in place, the nursery now has the breathing room to grow. A structured solution, delivered at pace, for a business that simply needed the right lender.

Why make business borrowing difficult?

Speak to our team to find out more about our Secured Business Loan today:

📞 0161 312 5656

📧 brokers@somo.co.uk

Find your Regional Relationship Director or explore our full range of bridging loan products.

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FAQs

What is Somo's Secured Business Loan?

We looked at the marketplace and found a better way to borrow - a smarter solution than bank lending with its red tape and hurdles and other expensive Alternative finance. 

• Flexible terms from 1-3 years 

• Loans from £27.5k to £3m 

• No monthly interest or service payments until redemption 

What is the interest rate of Somo's Secured Business Loan?

For Somo's Secured Bridging Loan, interest rates start from 7.5% to 15% p.a. depending on the case.

Will I be eligible?

Somo's secured business loan is suitable for all borrowers including self-employed, new start-ups and limited companies. We don't lend based on on turnover and no business/trading accounts or bank statements are needed. All that is required is the Director or business owners own property.