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Case Study: Using short‑term secured lending to create flexibility during a complex refinance 

Read time: 2-3 mins

When a company faces restrictive funding conditions but isn’t ready for a full refinance, the right short‑term option can provide essential breathing space. This short‑term secured lending case study explores how a business used a flexible interim facility to ease cashflow pressures, avoid unnecessary redemption costs, and create a smoother pathway toward long‑term refinancing.

Client Overview 

A long‑standing North East client navigating the after‑effects of an earlier management buyout and seeking greater flexibility within its existing funding structure. 

The Situation 

The client had previously completed an MBO supported by a set of facilities arranged at the time. As market conditions tightened toward the end of 2023, the structure that once worked well began to feel restrictive. The knock‑on impact of a challenging trading period continued well into 2024, creating a difficult backdrop for attempting any major refinancing activity. 

With redemption fees making a full restructure commercially unviable, the business needed a practical, short‑term solution that would ease immediate pressures while keeping long‑term options open. This is a common real‑world scenario where short‑term secured lending provides essential breathing space. 

The Challenge 

The client wanted greater flexibility, but the timing wasn’t right for a full refinance. Trading performance had dipped, making the traditional route harder to secure—and triggering redemption on the current facilities would be costly. The key challenge was finding a way to adapt the structure without destabilising the existing arrangements or incurring unnecessary fees. 

Exploring the Market 

Rather than force a full refinance prematurely, we explored whether the existing lender could offer a more flexible interim structure. The objective was to relieve short‑term pressure, strengthen the client’s position, and set up a smoother transition to a longer‑term facility when market conditions improved. 

This approach mirrors a common STSL use case: bridging between “what works now” and “what will work better later,” without creating additional financial strain. 

The Solution 

We negotiated directly with the existing funder to agree a more workable structure that met the client’s needs: 

• Facility type: Short‑Term Secured Loan 

• Facility amount: £300,000 

The lender agreed to allow the refinancing of the property loan originally taken at the time of the MBO. Initially, this has been structured on an interest‑only basis to give the business immediate flexibility and conserve cashflow. 

Over the next 12 months, the plan is to transition this into an amortising commercial mortgage once trading performance recovers and the timing is more favourable. 

The Outcome 

The business gained the flexibility it needed—without paying redemption penalties or being forced into a full refinance at the wrong time. 

The interest‑only structure gives the client room to stabilise, rebuild momentum, and prepare for a longer‑term funding arrangement when the trading picture and cost profile are more aligned. 

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Why It Matters 

This case is a strong real‑world example of why short‑term secured lending exists: it creates breathing space when a business needs an interim solution, not a long‑term commitment. For wider guidance on business finance and funding options, visit the British Business Bank.

When timing, trading performance, or costs make a full refinance unviable, a short‑term secured facility can act as a bridge—allowing the business to regain stability, preserve cash, and transition at the right moment instead of the forced moment.