A general overview of commercial lending in the UK.
In general commercial lending for a business works in much the same way as a mortgage for residential property. It is secured by first legal charge over the property to be used as security, whether a purchase or a remortgage.
Commercial lenders can lend on any type of commercial property and in any business sector, including retail, manufacturing, office, domestic housing development, industrial, agriculture, or even land. The property in question needs to generate the required amount of income to support the loan being applied for. This will either be the net profit of the business, or the rent if the property is to be let. Some lenders use outside income to augment the income generated by the subject property.
Semi Commercial Lending. Some forms of commercial property have living accommodation included. This can be self-contained, or have access from the commercial part i.e. living accommodation above retail premises.
Self Cert Commercial Lending. Most commercial mortgages require satisfactory evidence of business income, or rental income to prove serviceability of the loan being applied for. However, this is sometimes difficult to prove and so in these circumstances, a self certification (self cert) commercial mortgage is required. The maximum lending can be up to 60% of property value, although 50% is more common.
Commercial Development Finance. This form of finance is a specific lending product tailored towards the needs of a property developer with some proven track record of previous property development or renovation projects. Development Loans can be secured against land, building plots or even derelict property where there is potential for redevelopment. Development Finance will be made is stages, with the initial loan for property purchase and subsequent tranches of the loan being used for financing the construction, building and development costs of the project.
Commercial Bridging Loans. This is short term funding and can be used in many circumstances. Typically, this is where there is need for a rapid acquisition of commercial property. This may be just for a few months while a more long-term commercial mortgage can be arranged. Commercial Bridging Finance can also be used for short-term funding of property transactions such as land, or asset purchase to plug the funding gap in the critical stages in the acquisition process. Bridging is also utilised for short term refinancing where speed and flexibility is required. Bridging can also be used to purchase property without a deposit, as lending can be based on additional property as security.
Bridging loans can complete within 28 days making it the ideal short term funding solution for auction purchases when quick financing is required. Loans can also be raised for non-property related transactions, such as purchase of stock, or purchase of a business asset on time sensitive contracts. Whatever your circumstances and requirements, a bridging loan could help you solve a funding gap.
Residential Bridging Loans. A bridging loan is designed for short term finance secured against residential property where conventional funding would take too long to arrange, or where the property itself needs refurbishing, or repairing. Bridging loans can also be used when purchasing a property prior to the sale of an existing property. Bridging finance many also be used in certain circumstances for example to avoid bankruptcy and/or a repossession (paying off mortgage arrears). Loans are based on the current value of the property.
Commercial Loans for SMEs (small to medium enterprises). With over 23 years experience, we can find a commercial mortgage to suit your needs. Even if you have been turned down by the bank we still have financing options to suit you. Options include interest only monthly payments and repayment terms up to 30 years. There is flexible underwriting to fully understand your circumstances.
Cann 0117 223 2050 now to discuss your requirements with an experienced adviser.