Commercial Loans

Have you heard the one about the public toilet in Kensington?

The land the toilet was built on had a title and subsequently funds were secured on that title. This is absolutely true.

Commercial lending can often appear to be a minefield and some Intermediaries shy away from it. With a new approach coming from the Government to create consistent business growth in the UK, commercial lending should be on every Intermediaries radar.

Commercial lending is extremely diverse and can be used in numerous ways to raise capital.

You can secure on car parking spaces, boat moorings and lock ups, to name just a few, as long as there is a title.

That’s a brief peek into the weird and wonderful, just as a taster, but the more mainstream things to secure on are:

  • BTL's
  • Land
  • Commercial properties
  • Semi- commercial properties
  • Holiday lets
  • Part builds
  • HMO's
  • Assets

Owner/occupiers use commercial loans for numerous different reasons. They can be used as an exit strategy for a bridging loan, equity release for business expansion, to purchase investment properties and to pay tax bills. These are the most common forms of commercial loan.

However if a business property doesn't have enough equity to secure the full amount of required funds, a cross charge can be agreed on the residential property if there is equity in it, for example 80% of the loan can be secured on the business premises if it's owned and the additional 20% can be secured on the residential property.

Also commercial loans are great for development as development finance can be released in tranches.

An example of this is could be a developer wants to buy a plot of land to build 5 houses. The land and development will cost £500,000 and the resale value is estimated at £1,000,000.

The money can be released in tranches, so £100,000 is released as the first tranche with an agreement of the works to be completed before the next release of funds. The surveyor will survey the current completed works and if appropriate will authorise the release of the next tranche of funds and this will continue until the project is completed.

If you are unsure about whether your client can get funds through a commercial loan, just contact us to discuss the case and we will work with you to find the right solution for your client.

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