Author: Stewart Hindley

Specialist financial experts helping you secure commercial loans across the hospitality, leisure and commercial property sectors.

What is asset financing?

Posted on by Stewart Hindley

Asset financing is a type of loan designed to enable the purchase of high-value items or resources on behalf of a business. These items or resources are known as assets.

Taking out asset finance makes it possible for a business to secure the assets it needs and pay for them gradually over time through fixed repayments, making asset financing good for cash flow and achieving business growth. Asset financing may also involve a business using an asset it already owns as security against a loan to boost working capital.

A business of any size can make use of asset financing, as long as it can meet the criteria required to secure the loan.

What counts as an asset?

In business terms, an asset is an item of value that provides business benefits. All businesses need assets to carry out operations or generate an income, and may secure assets by purchasing or leasing them.

Examples of business assets include buildings, vehicles, IT equipment, inventory and raw materials.

Types of asset finance

The two main types of asset financing are Hire Purchase and Leasing. Both involve borrowing funds from an asset finance provider to procure a business asset, but differ with relation to what happens to the asset after the loan term.

Once a Hire Purchase asset financing agreement is settled, the asset either automatically becomes the property of the business or they will have the option to pay a final payment and own it outright.

Conversely, at the end of most Leasing asset financing agreements, there is no option for the business to purchase the asset and keep it, although Stewart Hindley is proud to be different. We offer our leasing customers the chance to own their leased assets outright via a process called passing title, for a fee agreed at the start of the loan term.

Why asset financing?

There are many benefits to asset finance for businesses. Many opt for asset finance so that they can spread the cost of large outlays, stay in control of cash flow and put working capital back into the enterprise itself, rather than investing in assets upfront. There’s also no need to provide extra loan security, since the asset itself acts as security.

Asset financing loans can run up to a maximum term of seven years and the repayments are fixed, so a business can budget exactly with no danger of hidden costs. Interest rates for asset finance tend to be lower than those associated with other forms of lending too.

If you’re ready to find out more about asset finance for your business, get in touch with us today.

What is hotel financing?

Posted on by Stewart Hindley

What is hotel finance?

Hotel financing is a type of commercial mortgage designed to fund a new hotel, guest house or B&B project or to reinvigorate or refinance an existing one. This type of finance is specifically intended to meet the particular needs of hoteliers and hospitality businesses.

While it is possible to obtain a commercial mortgage for hotel financing from a traditional bank, hotel finance is best sourced with the help of an experienced hotel finance broker with access to exclusive rates from the whole market.

The hotel and wider hospitality industry is fiercely competitive yet highly rewarding for those with the qualities lenders are seeking, so it pays to prepare an application for hotel financing with expert guidance.

How does hotel financing work?

Hotel lenders will only consider the most robust hospitality business opportunities, and there are strict criteria that govern the hotel financing application process.

Anyone seeking hotel finance, whether they are new to the industry or a seasoned hotel operator, will need to submit detailed forms regarding their hotel business and business plan, their experience in the sector, as well as their plans for the loan and how it will be repaid. While experience in the hotel trade is a definite plus when seeking hotel finance, it is entirely possible to secure a commercial mortgage for a hotel business as a new to trade hotel buyer.

In most cases, lenders will look for a deposit of 30% or more, additional security, a solid business plan, a good personal credit rating and three years of trading accounts from the loan applicant and the hotel vendor.

When a hotel financing application is made via a specialist broker like Stewart Hindley, these criteria are put to specialist lenders from across the whole market with whom the broker has established years of positive rapport. It’s the job of a hotel finance broker to not only help the applicant create the most attractive business opportunity, but to seek out the most suitable lenders on their behalf.

Securing hotel finance

At Stewart Hindley, we have refined an expert approach to assisting both experienced hoteliers and those new to the trade in securing hotel financing. Our specialist team can guide you through the complexities of building a strong hotel finance application, before identifying the best potential investors and obtaining the best market rates.

Get in touch today to find out how we can help you acquire the hotel finance you need to turn your hospitality vision into reality.

How is coronavirus affecting the property market and loans?

Posted on by Stewart Hindley

The Covid-19 pandemic has had a significant impact on virtually all aspects of the UK economy, and it’s likely that the effects will be felt for months, or even years, to come.

And this includes the commercial property market.

What does it mean for the commercial property market?

During the initial lockdown back in March, the commercial property market was hit hard, with widespread lockdowns coming into force throughout the country. The vast majority of businesses were asked to shut their doors completely, or encourage their workforce to work from home, leaving many commercial buildings up and down the country, standing empty.

Data collected has already indicated that less than half of tenants paid their rent on time on June Quarter Day, meaning commercial property landlords only collected 38 percent of their rent.

The situation is still very unstable and the threat of a second wave of the virus, with the possibility of further regional lockdowns is very real. With this in mind, we anticipate prices and demand will fluctuate for at least the next few months as the market adjusts to the ongoing economic environment.

How have commercial property prices been affected?

There’s no denying that the retail and commercial property sector have been hit the hardest and this naturally has had an impact on commercial property prices. Experts predict that rent arrears will not only be an ongoing issue but the capital value of many commercial properties could also fall by as much as 20-30 percent.

Essentially, things are still very uncertain. However, for first time buyers in particular, this could mean there are some great deals to be found.

What does this mean for commercial mortgages?

Commercial mortgages have been a hot topic during the pandemic as they have been a great way to purchase property, or refinance a property that’s already owned. Many business owners are contacting commercial mortgage lenders for additional borrowing, for reasons such as:

  • Securing a better interest rate
  • Recouping funds
  • Reducing monthly costs
  • Gaining financial support
  • Taking advantage of the spike in the market

However, it’s important to be aware that, as within the residential property market, commercial lenders have become far more cautious as the UK heads towards another recession. With this in mind, if you are considering purchasing a commercial property during the pandemic, you can expect lower loan-to-values and more stringent affordability checks.

That said, there are still plenty of lenders out there to choose from.

If you’re looking to take your first steps on the commercial property market, or you’re planning on selling your property and looking to secure finance, we can help you find the best deals around.  Get in touch to discuss your property finance needs.

An Introduction to Commercial Development Finance

Posted on by Stewart Hindley

Whether you’re looking to take your first steps onto the commercial property ladder, or you want to kick start your next project, you will probably find that you need to source commercial funding.

There are a whole host of commercial development finance solutions available for landlords, property developers and investors. But the lending market can often be overwhelming, even for the most experienced property developers and landlords.

We’ve created a helpful introduction to commercial development finance – we hope that you find it useful.

What is development finance?

Development finance is a type of loan that releases a set amount of funds in stages, in order to cover the cost of the development of a commercial property.

The funds are generally released at set stages of the project and are typically taken out over a period of six to 18 months. So, for example, funds are released in the early stages to secure the property and then at various points throughout the project to allow for construction and refurbishment.

Once the project has been successfully completed, the property can either be sold or a commercial mortgage can be taken out against it.

Whether you’re completing a short-term refurbishment project, major renovation work or a ground-up development, there are lots of development finance options available, designed to accommodate your project scope and time frame.

Commercial development checklist

If you’re considering applying for commercial development finance, almost every lender will ask for the following information before they start processing your application:

  • Details about your company
  • Your development track record, including evidence of experience and proven returns
  • Six years’ business accounts and tax returns
  • A thorough breakdown of project costs
  • Detailed development plans
  • Estimated gross development value (GDV)
  • Details of assets and liabilities associated with your company
  • Exit strategy plan

The amount you’ll be able to borrow depends on a number of different factors, including your credit history, how long you need the finance for, and your track record when it comes to managing and delivering successful property development projects.

There is also a range of other development finance options that can be used to tap into the commercial property sector, including commercial mortgages, bridging loans and auction finance.

Choosing a commercial mortgage for your exit strategy

Commercial mortgages are used to purchase a wide range of commercial properties such as offices, warehouses, shops and other commercial buildings. They are commonly taken out following a commercial development project.

Just like a residential mortgage, commercial mortgages allow property developers to purchase a building and spread the cost over a set period of time.

If you’re considering buying a commercial property, it’s important to speak to someone experienced in the sector to ensure you are aware of all the funding options available to you.

Get in touch to speak to one of our skilled and experienced team. Here at Stewart Hindley, we are always on hand to answer any of your queries regarding commercial mortgages and commercial development finance.

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