Mortgages and Financing

Business Loans

What Are Business Loans?

Business loans are a ‘catch all’ loan product which can be used where more specific finance products are not suitable.
What Can Be Financed Via a Business Loan?

Business loans can be used to finance:

    Working capital requirements
    Purchase of plant, equipment and machinery
    Property refurbishment
    Or any justifiable business need

What Amounts Can be Raised on a Business Loan?

Minimum and maximum amounts will vary between finance providers but typically amounts will start at $1,000 up to $25,000.
What If I Want More than the Maximum?

Larger loans are available and the only difference is the amount of information the banks require and their assessment process.
How Long Can I Have a Business Loan For?

Business Loan terms will run from 1 to 10 years. The term you will be offered depends on the purpose of the request; a loan for the purchase of a piece of equipment for example cannot be longer than the expanded life span of that item.

If you require a larger loan than the typical maximum then you would benefit from repayments terms of up to 20 years.

Commercial Mortgages

What is a Commercial Mortgage?

A Commercial mortgage is a medium to long term loan which can be used to fund the purchase of business premises, extend a premises, to release capital from premises already owned, or to buy an existing business.

A commercial mortgage can also be used to purchase a commercial investment property i.e. a commercial property that will be rented or leased to another business.
What Properties Can By Funded Via a Commercial Mortgage?

Commercial mortgage finance is available on a wide range of properties such as:

    Hotels and guest houses
    Industrial Units
    Care Homes
    Pubs and Restaurants
    Shops and Retail Units
    Shops with Living Accommodation
    Agricultural Land

Who Can Get a Commercial Mortgage?

A commercial mortgage can be approved to sole traders, partnerships, LLPs, and Limited Companies. A pension fund, in the form of a SIPP or a SSAS, can also borrow via a commercial mortgage.
What Do You Need to Get a Commercial Mortgage?

When applying for a commercial mortgage the key point to remember is that the lender’s decision will be based your ability to meet the repayments. This will be assessed by reviewing the historic financial performance of the business (past Financial Statements/Accounts and latest Management Accounts) and financial projections (projected Profit and Loss, Cashflow and Balance Sheet).

To help the lender reach its decision you will typically need to complete a detailed Application Form, prepare a Business Plan and submit full financial details about the promoters, directors and shareholders.
What Are the Typical Requirements, Terms and Conditions?

Typical terms for a commercial mortgage would include:

    A legal charge will be taken on the property to secure the commercial mortgage
    The maximum loan to property value (known as the LTV) will be within the range of between 65% and 80% of the purchase price or valuation, whichever is the lower. The LTV will vary by lender. This means that you will need to have a deposit or contribution of between 20% and 35% of the purchase price/valuation.

    The minimum amount is typically $25k; depending on the lender maximum amounts may apply
    Repayment term will typically range from 1 year to 25 years
    The interest rate chargeable will be calculated from the Bank’s current Base Rate plus an additional percentage ranging from 3% to 5%. The calculation of the additional percentage (referred to as the ‘bank’s margin’) will be based on a variety of factors. In simple terms, the lower the risk to the lender then a lower margin is applied; a higher perceived risk will result in a higher margin.

    Interest rates can be fixed for a number of years or variable (moving with the bank’s Base Rate)
    During the early years, in order to ease cashflow pressure, capital repayment holidays can be requested. If agreed you will pay interest-only for a period typically for up to 3 years; thereafter the repayments will cover both capital and interest.

    Arrangement or Lending Fees will be charged by the lender at amounts between 1% and 2%. If arranged through BLS further fees may also be charged by BLS and are negotiated on an individual basis. In some cases the lender fees and associated borrowing costs can be added to the loan
    Early repayment charges will typically apply if you repay all or a portion of the mortgage before the expiry of the fixed term. If such charges do apply the percentage will vary according to the Lender

What Do I Do Next?

If you are looking for a commercial mortgage, to ensure you get an offer which suits your requirements, get in touch with us to discuss the options available to you.


Bridging Loans

What Is a Bridging Loan?

Sometimes the property deal of lifetime can be presented to you but you can’t move quickly enough because you don’t have the cash to hand and so someone else is left to profit from the deal.
This is where Bridging Finance or a Bridging Loan can help.

Bridging Loans allow you swiftly access to funds on a short term basis which will allow you to complete the purchase of a property within a very tight timescale. This will not only secure the property but a Bridging loan will buy you precious time to source a more appropriate long-term financing solution.

What Can Be Financed on a Bridging Loan?

A bridging loan is used to finance the purchase of a building that can be a:

    Commercial premises
    Residential premises
    Mixed use premises

A bridging loan can also be used to purchase a building which requires refurbishment or renovation. You purchase the property funded via bridging loan, undertake the required work and then re-finance based on the higher valuation or sell the property and realise your profit.

Here’s an example of how a bridging loan helped one business owner secure the future of his business.
How Quickly Can a Bridging Loan be Arranged?

Obviously the better prepared you can be prior to going to an auction for example then the easier it will be to arrange the ideal bridging loan.

However, if speed is of the essence and everything is in order, a decision can be reached in 48 hours with funds available within 5 days.

How Long Can I Have a Bridging Loan For?

Bridging loans are typically available on terms ranging from 1 to 12 months.

Asset Finance

What is Asset Finance?

Using precious cash reserves to purchase capital assets can put pressure on your ability to fund ongoing growth. Purchasing business equipment and assets via an Asset Finance facility preserves your cash in that payment for the asset is spread over a set number of months.

There are different type of Asset Finance such as Finance Lease, Hire Purchase, Operating Lease, and Re-finance (known as Sale and Leaseback); each has different benefits and financial advantages.

You are in control of the process in that you identify and negotiate the purchase of the asset; the Asset Finance company will organise the finance deal.

Depending on the type of facility you take ownership of the asset or equipment at the end of the term can be yours for an agreed nominal fee, you can continue using it under a secondary rental agreement, or just hand the asset back.

What Can be Funded Via Asset Finance?

The type of assets which can be funded via an Asset Finance facility is very broad. Assets can range from general plant and machinery, business equipment, commercial vehicles, construction equipment, medical equipment, farm machinery, IT equipment; restaurant equipment; in fact there are Asset Finance providers for most types of asset purchases that a business is likely to make.

Who Can Get an Asset Finance Facility?

An Asset Finance can be approved for sole traders, partnerships, LLPs, and Limited Companies.
What Do You Need to Get an Asset Finance Facility?

    The provider will wish to assess your financial position by reviewing your Annual Financial Statements and Management Accounts. The providers will not want a full review of your business as a bank would but it need to be comfortable that you can afford the monthly commitment.
    You will need to provide full details of the asset to be purchased.

What Are the Typical Requirements, Terms and Conditions?

    The repayment period will be linked to the economic life of the asset
    Up to 100% of the value of the asset can be extended (excluding VAT which you will have to fund). As a deposit up to three months payments will typically be requested
    Amounts available can start at $1,000

    The provider will take the asset purchased as security for the facility so in many cases, depending on the strength of the business, no additional security will be required
    The interest rate charged will vary and is based upon the perceived level of risk

What Do I Do Next?

If you are looking for an Asset Finance facility, to ensure you get an offer which suits your requirements, get in touch with us to discuss the options available to you.

Development Finance

What Is Development Finance?

Development finance is available to assist with construction or renovation of either commercial or residential properties. Due the size of many development projects a significant amount of capital could be tied up and so development finance can used to part purchase a site with addition funds made available to finance construction costs.

What Much Can I Borrow?

Each project is individually assessed but typically 65% of the Gross Development Value (GDV) with up to 70% to 75% of the purchase price/construction costs.

How Long Can I Have a Development Finance Facility For?

Development Finance loans are typically available on terms up to 12 months. By that stage you will either have sold the assets or re-financed the facility based on the enhanced value of the property.

Pension-Led Funding

What is pension-led funding?

Pension-led funding has helped more than 1,500 businesses owners take control of their company finances, using money from their own accumulated pensions as an alternative source of business funding.

Suitable for a variety of business needs, it arguably offers greater flexibility and independence than borrowing through the traditional channels and has the potential to grow the business owner’s pension alongside the funded business.

What can be funded via pension-led funding?

Pension-led funding can be used for genuine commercial reasons.

Who can use pension-led funding?

Pension-led funding is aimed at directors who have a pension (either singly or in combination with other company directors). Businesses from all sectors have used this form of funding particularly service-based businesses, tech, media, manufacturing and franchises. It also allows businesses to use intellectual property as an asset for a pension loan. It can be used as stand-alone funding or in combination with other forms of finance.

What do you need to use pension-led funding?

The main requirement is to have a personal pension and be the director of a limited company. This form of finance allows you to invest your pension in your business for genuine commercial reasons.

What are the typical requirements, terms and conditions?

The director (s) existing pension (s) is combined into a new company pension scheme. A loan can be secured against an unencumbered asset or the new pension scheme can purchase an asset and lease this back to the company. Regular payments of capital and interest, at a commercial rate, must be made from the business back into the new pension scheme – this type of funding is only used if the pension can make a commercial return. As the funds are repaid to the new pension scheme it is possible to do repeat funding back to the business.

What Do I Do Next?

Pensions is a highly complex area and subject to regular changes and as such we recommend you seek advice from your Financial Advisor who can assess suitability.

What Do I Do Next?

To find out more simply send us an email via the Contact Us.