Debt Advisory UK: Independent Financing Advice

A UK debt advisory mandate typically runs through five workstreams:

• Debt-capacity diagnostic. Adjusted EBITDA, cash conversion, working-capital swings, capex, existing facility terms and a downside case, to establish what leverage and DSCR the business can genuinely support before any lender is approached.
• Lender mapping and preparation. Building the information memorandum, financial model, management presentation and data room, then matching facility size, sector and structure to a realistic shortlist rather than a blanket mailshot.
• Competitive process. NDA, outreach, management Q&A and indicative proposals run in parallel across several lenders, so pricing and structure are tested against each other rather than accepted on trust.
• Offer comparison and negotiation. Comparing all-in cost, leverage, amortisation, covenant headroom, flex, security and certainty of close, not just the headline margin, then negotiating the chosen term sheet.
• Documentation to drawdown. Facility agreement, intercreditor terms, security package, conditions precedent, and coordination of legal, tax and KYC workstreams through to funds flow.

A separate but connected point: real-estate-backed debt (an owner-occupied premises purchase, a development facility, or a sale-and-leaseback alongside a trading business) is usually underwritten on loan-to-value and forced-sale valuation rather than EBITDA multiples, and often sits with a different specialist lender panel than a company's working-capital or acquisition debt. Where a business carries both a trading facility and a property-secured loan, the two need to be structured so neither blocks the other's security or covenant package.

The Bank of England held Bank Rate at 3.75% on 18 June 2026, with the next decision due 30 July 2026, so sterling floating-rate quotes below are expressed as a margin over that reference rate.

Facility type	Typical leverage or advance	Indicative pricing	Notes
Lower mid-market bank loan, £1m-£10m	2.0x-3.5x EBITDA	SONIA + 3.0%-5.0%	1%-2% arrangement fee; 0.3%-0.75% undrawn RCF fee common
Sponsor-backed senior bank package, £10m-£100m+	3.0x-4.5x EBITDA	SONIA + 3.25%-5.0%, published median 4.25%	Hedging frequently required; 1.5%-2.5% upfront
Unitranche or direct lending, £10m-£250m+	3.5x-5.5x EBITDA, up to 6.5x for exceptional credits	SONIA + 4.75%-7.5%, published median 5.50%	1.5%-3.0% OID; limited amortisation, more structural flexibility
Invoice finance and receivables ABL	75%-90% of eligible receivables	Base rate or SONIA + 1%-5%, plus 0.5%-3% service charge	Lloyds and Kriya publicly state advances up to 90%
Commercial mortgage, owner-occupied or investment	55%-75% LTV, selected products to 80%	Bank Rate + 2.5%-5.5%	1%-2% arrangement plus valuation and legal costs

Two market signals worth knowing before you negotiate: a European lender survey found 69% of respondents saw margins fall through 2025 and 46% of those saw at least a 50bps reduction, and covenant headroom of 30%+ was reported by 59% of banks and 35%+ by 45% of funds surveyed. Terms have been loosening, which is a reason to test the market rather than accept a first quote.

Worked example. A £20m five-year private-credit facility priced at SONIA 3.75% plus a 5.50% published median margin carries 9.25% annual cash interest before floors and hedging, or £1.85m a year fully drawn. A 2% upfront fee adds another £400k, which annualises to roughly 40 basis points over the five-year term before legal and adviser costs. That structural cost, arrangement fee, undrawn fee, hedging and covenant flexibility, routinely outweighs a 50-100bps difference in headline margin, which is why comparing only the quoted rate is one of the most common mistakes we see.

Fee books are mandate-specific, but the structure is consistent: a work fee or monthly retainer, plus a completion fee tied to committed or drawn facilities, sometimes with a minimum. For a £1m-£10m raise, expect a £10k-£40k work fee plus roughly 1%-2% of committed facilities, with minimum success fees typically £25k-£75k. For institutional lower mid-market mandates of £10m-£100m, work fees of £25k-£100k plus 0.5%-1.25% are typical, higher for rescue, non-sponsored or cross-border situations.

Our engagement letters state the fee base (committed facility versus initial draw), how refinanced existing debt is treated, any lender-paid commission, the minimum fee, abort fee, tail period, exclusivity terms, VAT and expenses in plain language before any work starts.

One regulatory point worth knowing: ordinary lending to a UK limited company generally sits outside the consumer-credit perimeter, but credit broking to sole traders or relevant partnerships, arranging bonds or notes, and regulated mortgages can bring FCA permissions into play. We state which permissions apply to a given mandate rather than leaving it implicit.