Atom bank has completed a £663,000 loan to fund the acquisition of a Wolverhampton pub, in a deal that hinged on the lender’s willingness to consider business goodwill in lieu of a traditional cash deposit.
The borrower, who had been the sitting tenant at the Cow Shed bistro pub, was given the opportunity to purchase the freehold from Marstons. The sale offered a rare opportunity for the operator to gain full control of the business and operate independently of brewery tie arrangements.
While several commercial lenders declined to proceed due to the absence of a cash deposit, Atom bank was able to step in, thanks to its policy of accepting goodwill — in this case a portion of the £1 million market value of the property — as an alternative form of contribution.
Ashley Clements, associate director at Christie Finance, brokered the deal. He said Atom’s clarity and consistency on credit criteria was crucial in getting the deal across the line, especially given the tight timeline.
The facility, which carries a variable rate of 2.58% plus base rate at 66% LTV, includes additional funds to support refurbishment of the premises. It was provided under the government-backed Growth Guarantee Scheme (GGS), the successor to the Recovery Loan Scheme.
Spencer Ford, regional business development manager at Atom bank, said the lender’s ability to move quickly and take a flexible approach to underwriting was essential to securing completion.
“This was a case with a tight timeline, and getting it over the line was only possible if all parties were fully engaged. The fact that we managed to do so in a matter of weeks is incredibly gratifying, and testament to the professionals involved,” he said.
“Atom bank stands apart from rival lenders in this space because of our ability to consider goodwill contributions. That flexibility opens up more opportunities for businesses to take the next step and set themselves up for success in the future.”
The solicitor acting on behalf of Atom was Sophie Morton at Lawrence Stephens.
Atom bank was one of the largest participants in the Recovery Loan Scheme, providing more than £240 million in funding, and received GGS accreditation ahead of the new scheme’s launch. The programme enables SMEs to borrow up to £2 million for purposes such as investment, refinancing or working capital.
Commenting on the deal, Ashley Clements said: “I have worked with Atom bank and Spencer many times before, so I was confident they would be able to support the client in this case, despite getting a firm ‘no’ from many others.
“Atom bank has a really clearly defined credit policy, which means we know where we stand — other lenders might rely more heavily on underwriter judgement, which often creates more uncertainty.”
He added that the deal would enable the operator to expand and optimise the pub’s performance on their own terms. “The flexibility in Atom’s approach enabled our now mutual client to purchase the freehold of the pub and be in full control of their own destiny, giving them the freedom to choose multiple suppliers and operate the business in a way that they feel fit.”
