Commercial property finance explained

As your business expands or adapts to new industry conditions, you may find yourself restricted by the space your company calls home. Needing new space for expanding manufacturing needs, expanded staff numbers or more space for customers is something that holds so many businesses back because they are concerned about finances.

Your businesses property is one of the most important assets you have and there are many financial routes that will allow you to meet your space requirements without putting the whole business in jeopardy.

Commercial mortgage finance, while being the most used route to acquiring commercial property is just one commercial property finance option for your business. This simple guide will give you a strong starting point to your finance options.

Commercial mortgage finance

Let’s start with the most common finance option for commercial property, Commercial mortgage finance, an area that Asset Finance Arena are experts in, not just in the Derby region but nationwide.

The market for commercial mortgages is wide and varied in terms of the available products, but regardless of your commercial status (company director or sole-trader), there will be a product to fit your needs.

Research is essential to find the best needs (or you can hire a mortgage broker to do that leg-work for you), but generally commercial mortgage finance lenders lend up to 75% of the total property value,  with terms of anything up to 30 years. Lending is based on your business’ ability to make monthly payments and your projected profitability and it is secured against the first charge.

Price comparison sites are a good way to get a feel for what is available, but it is also worth considering that brokers will have relationships with lenders that will potentially yield better and more bespoke deals.

Any capital tied up in existing commercial property could be used to raise capital through commercial mortgage finance, getting you a better deal and elevating financial concerns further.

Auction finance

Property auctions are an increasingly common way to acquire commercial property, and it is essential that you have the funds available heading into the auction house. Essentially an extension of commercial mortgage finance, auction finance provides the funds to bid with confidence while protecting you financially. The most experienced commercial property buyers regularly use this type if finance.

Our partners at Commercial Hub offer the best in online property auctions.

Portfolio lending

If your business is moving to a new site but keeping on the original (which is not paid off), portfolio lending will allow you to consolidate your lending into one loan.

Development finance

It is possible that there is nothing on the market that meets your requirements, and you are doing well enough to build your own property to house your business. Lenders will often offer up to 70% of the cost of as refurbishment or new property build. Finance is lent on terms of anything up to 24 months, allowing for a short-term fix to get your property built to a high standard quickly.

The products, terms and rates involved vary widely from lender to lender and across finance types, which is why it is worth employing brokers expert in property finance to help find the right fit for your business and budget. Don’t let finance concerns stop your business taking the next step.