This engagement came to us through a referral from the client's lawyer. The client is a registered non-profit society in the BC Interior that runs a licensed childcare operation out of a building it owns, carrying a mortgage of a little over million. The society is governed by a volunteer board, and no one on it had run a commercial financing process before. They were coming up to a renewal and wanted to be able to show, to themselves and to the people they answer to, that they had properly tested the market first. They engaged us exclusively to do that.
We prepared a financing request and took it to our lender network. Three lenders came back with competitive offers and one was clearly in front, on better pricing than the society was paying and on terms the board was comfortable with. We recommended it, the society accepted, and that lender started its due diligence.
Then it declined. Having completed its diligence, the bank did not grant credit approval, and the offer we had all been working toward disappeared.
This is the point at which how a process has been run starts to matter. All the way through, we had kept the incumbent lender in the conversation and had been straight with them about what we were doing and why. We had not used anyone's offer as a bargaining chip, and we had not let the existing relationship sour in pursuit of a new one. So when the preferred lender fell away, the society had somewhere to go instead of starting again from nothing.
Lower costs: we went back to the incumbent and negotiated an amended and restated agreement rather than a renewal on the old terms. The mortgage was re-amortized over twenty-five years and repriced at 4.53% fixed for a three-year term, with blended monthly payments of $11,492. That reduced the society's annual debt payments by $52,000 and, on a like-for-like comparison, saves $62,000 of interest across the three years. Measured against our engagement fee, the interest saving alone is roughly six times what the work cost.
The society also kept the banking relationship it already had, and its board got the documented market test it came to us for.
It is worth saying plainly that we did not win the deal we expected to win. The lender we recommended was the right recommendation on the information available, and it still fell over. What the process delivered was a better outcome than the one the society started with, arrived at by a route none of us planned.
If you sit on a board and want to be able to demonstrate that you tested the market before signing a renewal, that is precisely what this kind of engagement produces. Start with a 15-minute commercial debt review and we will benchmark your pricing, covenants, guarantees, collateral and available leverage against what we are seeing in the market right now.
