If you want to raise funds quickly on a commercial property already owned or for the purchase of a commercial property that you are looking to buy, then commercial finance could be the ideal solution for you. Commercial mortgages due to their complex nature are notoriously much slower to arrange and complete than residential mortgages. This makes the use of commercial finance in this sector much more relevant. Commercial finance can be arranged and paid out often before a lender being used for longer term finance has even started to review the case.
Commercial finance, as it suggests, would be secured on commercial or semi-commercial properties in the same manner as a standard residential property loan and normally arranged within the same timeframe. The number of uses are also wide and varied but as commercial finance is not regulated by the FCA, additional funding reasons are allowable, provided any use is fully legal.
What is commercial finance?
Commercial Finance is any loan secured on property which is not your residence. This can be either owner occupied or buyer investment.
This type of finance relates to securing capital against a property which is used for commercial purposes such as a shop or office. Historically this long term funding would be sourced with traditional high street lenders. Their appetite for this market has become very limited since the financial breakdown in 2007/2008. Commercial Property prices took a bigger hit than residential and as a result there are fewer lenders in this marketplace. This has left many commercial property owners bereft of support and finance options.
Challenger Banks have stepped up to support this market place and as Whole of Market Commercial Finance Broker we are able to offer good interest rates to many of our commercial Customers.
The main kinds of commercial finance fall into two categories;
Owner Occupied; this is where an individual owns the property in which they have commercial offering. Such as a shop, factory or garage. The owner repays the loan through the profitable return of the business.
Buyer Investment; this is where the individual owns the property as an investment but does not run the commercial element of it. Such as an office block which local businesses lease from the owner or perhaps a building which offers residential flats. The individual simply receives revenue from the property as rental / lease payments.
Commercial bridging loans can be used for expansion of the business, improvements in the property or help with relocating the business.
It is important to note that any finance raised in either of the scenarios above would only be related to the bricks and mortar of the property. The profitability of the going concern is not taken into account as a lender can only take security for a physical building.
As a whole of market broker UK Property Finance do not source just any deal, we fully assess the client’s specific needs and arrange the very best deal to meet their commercial objectives and strive to offer more favourable terms than the client’s own bank.
We have always had a strong understanding of the individual policies and lending criteria of each investor we work with, which puts us in the enviable position of being able to secure reliable funding solutions in line with the specific needs of the applicant and those of the actual lender. When processing an application for finance, we always know exactly who to approach in order to get the best deal with the most beneficial terms.
Many of the funding solutions we are able to provide are quite simply unavailable through mainstream lending channels, or even through competing brokers offering similar services. Owing to the inimitable way in which we work, our clients always enjoy the most competitive rates and a time-sensitive, streamlined borrowing experience that satisfies all of their needs in one convenient package.
Why choose commercial finance?
If you had a commercial property that you wanted to convert it into a residential property i.e. an office block into a set of apartments then you could get commercial finance secured against the property to either fund the purchase and conversion or if the property is already owned, just to fund the conversion.
Commercial finance is used for numerous reasons such as: releasing equity for debt consolidation, business cash flow injection, building improvement or to purchase more new properties.
What about CCJs, bankruptcies and defaults?
If you have defaulted on previous debts or you have been made bankrupt in the past, UK Property Finance can still provide short-term secured business loans from 1 to 24 months and with no maximum borrowing amount. Unlike a business loan from a bank, commercial finance is arranged on a case-by-case basis, with each loan tailored to meet the individual needs of the borrower.
However, you will obviously need to show the lender that you have the ability to pay the loan back and you will also need to offer security in the form of a residential, mixed-use or commercial property. In general, our short-term business loans are available for private individuals, limited companies and partnerships and they are certainly not limited to those with a perfect credit score.
What types of property do you accept as security?
At UK Property Finance, we can provide short-term business loans secured against all types of real estate. Unlike a traditional mortgage, or a secured homeowner loan, commercial finance can be lent against undeveloped land, office units, Buy to Let buildings, licensed HMO (houses with multiple occupancy), semi-commercial or mixed use properties, retail units and residential or commercial redevelopments.
Commercial Finance for Commercial Property Transactions
As well as being useful alternative for those in search of business loans, commercial finance can also be used for a wide range of commercial property transactions.
Refurbishments, property acquisitions, Buy to Let auction purchases, refinancing and capital release are just a few instances where commercial finance can prove to be worth their weight in gold. As one of the UK’s leading commercial finance providers, we have sourced a wide range of time-sensitive solutions to a diverse range of financial situations whilst offering a level of client satisfaction that is quite simply unequalled.
Borrowing Against Commercial Property
A borrower can typically have a loan for commercial property that is up to 75% of the property value. UK Property Finance Ltd in many cases do raise higher amounts depending on the scenario of the application.
Commercial Loan Repayments
- Interest Only – as the term suggests payments simply cover the interest generated by the loan each month. This means the borrower will need to have a clear plan of how they will repay the loan at the end of its term, such as the sale of the property.
- Repayment Basis – all repayments include interest on the loan and an amount of the loan each month. This means that as the loan decreases so does the interest that the borrower pays on the loan. This results in the whole loan being repaid at the end of the month.
We pride ourselves on listening to our customer’s needs and matching them to our lenders criteria helping deliver their specific lending criteria. We have good relationships with our lenders ensuring you get the best deal possible.
Our “whole of market” offerings are directly Authorised by the FCA and our broker status allows us to source funds from any lender offering competitive commercial loan rates in the UK.
If you would like some advice on commercial finance then please complete our online form and we can get one of our finance experts to contact you.