Long term commercial finance, in the form of a commercial
mortgage, offers many small and medium sized enterprises
(SMEs) the ability to invest in their business with new
technology, new or refurbished premises, or increased stock
levels.
In the past, it tended to be only larger organisations
with a proven track record who could obtain commercial mortgages.
A large number of younger/smaller businesses were unable
to obtain this type of commercial finance and, as a result,
many businesses have been forced to rely on expensive short
term finance or left to use their owners' residential property
as security.
Fortunately, this gap in the market is now being targeted
by specialist commercial lenders who are willing to serve
the commercial mortgage needs of SMEs and owner-managed
businesses.
The problem
In the past, it has been difficult for small business borrowers,
self-employed traders, and partnerships to raise commercial
mortgage finance. This is because:
* Institutional lenders have focused on larger, corporate
lending secured on the tenant covenant of investment properties.
This sector is seen as being low risk and so has become
a favourite of many traditional lenders.
* The lending criteria of many mainstream commercial lenders
disqualify applicants who do not have three years' audited
account, those without business plans, or those with a less
than perfect credit history. As the UK workforce migrates
more towards self-employment, greater flexibility is required
from lenders to assess each case on its individual merits.
Until recently, this flexibility has been hard to find.
Similarly, in the past, the requirement for three years'
accounts has been a barrier to new or young businesses.
The solution
To address these problems, a number of commercial mortgage
lenders now offer commercial mortgages with some or all
of the following features:
* Available to small owner managed limited companies, partnerships,
and self-employed sole-traders
* Self-certification option - no need for three years'
accounts
* Finance available for any purpose - no bank imposed
restrictions
* Mortgage arrears, CCJs, IVAs, discharged bankruptcy
all considered
* Same day indicative offers
* Completion in weeks, not months
* Transparent mortgage tracking Bank Base Rate
* Mortgage term of up to thirty years
* Advances from £50,000 up to £1.5m
About the Author
David Miles edits a number of finance websites, including
TheCashClinic.com
- a UK Personal Finance Portal.
