A small business guide to property loans

In this piece in association with Fundbird, we give a basic overview of the main commercial finance options available to you.

If you’re a homeowner then you’ll know there’s a lot involved when it comes to buying a property. And when buying a business premises for your company everything is likely to be amplified with a bigger building, a higher purchase price and more fees.

Commercial mortgage

Commercial mortgages are long-term loans that allow you to purchase a property and pay back the value to a lender in regular instalments. Aside from the regular commercial mortgage loan, there are an additional four different types of mortgage available to you and your business:

Bad credit mortgages

These are specially designed for those with a poor credit history and therefore, are seen as high risk by lenders.

Multiple property mortgages

Whether you’re currently looking into buying a second business unit or you see expansion in your business future very soon, these mortgages allow you to consolidate loans in one place to cut costs and keep your finances organised.

Investment mortgages

With interest rates low, many people are now deciding to invest in commercial property. These mortgages cater for this kind of buyer.

Owner occupied mortgages

These are mortgages on properties with up to four units, with one of these buildings being the owner’s main place of residence.

Buy-to-let mortgages

Are you looking to become a landlord? Then this is the mortgage for you. Buy-to-let mortgages are tailored to fit the needs of a purchaser who intends to let out a property as a form of income.

Bridging finance

Bridging finance refers to short term, interest-only lending that is secured against land or property. A bridging loan usually runs for up to 12 months and in this time allows the lender to bridge a financial gap, such as cover a temporary cash flow problem, while another financial agreement is pending.

Bridging finance is extremely popular for businesses who are waiting for credit to become available when dealing with a property transaction. For example, if you buy a new business premises before your current one has sold.

Auction finance

If you’ll be buying property at auction it is important to have your finances in order before you raise that paddle to bid. But on occasion, your finances might not come through in time. So what do you do? That’s where auction finance comes in.

Auction finance works on a similar premise to bridging loans. These provide you with funding to cover the time between the purchase and your other finance coming into place.

Development finance

Whether it’s for a new build, conversion or extension, developing a property can cost into the tens of thousands and you may not have that kind of available cash in your business. Development finance helps you make these changes by securing a loan against the property or assets under development.

There are plenty of finance options available to you and your business, you simply have to analyse what’s best for your company. And always be sure to do your research and shop around for the best possible deal.

This piece was provided by Pure Commercial Finance.

FundBird.co.uk is a quick, easy and free online service that matches businesses with the best funding solution for their business and connects them with UK’s top funding providers.

Looking for finance? SmallBusiness.co.uk is working in partnership with trusted lenders to find the best business funding deals. Find out more here.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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