Commercial Self-Certification of Income
Obviously no-one takes any pleasure in paying tax; we actually don’t want to pay tax, so accountants do a great job, listing all the allowable expenses, including things we might never have thought of, in order to reduce net profit to a minimum. In this way, you pay as little Income Tax, or Corporation Tax as possible. This is good and the right thing to do. However, this might not always be the case, because while a lower net profit figure helps your save on tax, where borrowing is concerened, it can be a problem.
At some point you might need a mortgage, but lenders will want to see your annual accounts and, as we’ve just discussed, they might not show much net profit. The ideal situation would be if the lender didn’t need to see your accounts, but instead just asked the accountant if you could afford the monthly payments. Your accountant knows every detail about your business and your income, so who better to ask?
This is basically how a ‘self-cert’ commercial lender works, although they don’t like to call it self-cert these days. What the lender will require is two good proofs of your business and an accountant’s certificate. Of course, you can’t borrow as much as you could if your accounts showed a higher net profit, but this is still a vital service for businesses. You can borrow up to 60% of the property value.
This facility is available for relatively new businesses, where net profits have not really got going, or for more established businesses. You can raise capital for business injection, or purchase of an additional property, or many other reasons.
The interest rate will be higher than normal, but you can have the facility arranged on an interest-only basis and this will help to keep the monthly payments down. It should be regarded as a fairly short term arrangement until your accountant can produce a set of accounts suitable for the mainstream lenders. Then a commercial remortgage can be arranged to get back to lower interest rates.
Contact a specialist adviser on 0117 223 2050 to discuss your requirements.