Category: Commercial

Commercial Loans for Small Businesses

Posted on by Stewart Hindley

Whether you’re just starting out and need help with start-up capital, or you’re growing your business and need the funds to take it to the next level, there are a whole host of commercial finance products designed to meet the specific needs of small businesses.

Commercial loans are usually the first port of call for small businesses looking for finance. But, before you consider any type of business finance, it’s important to consider the options and understand the potential benefits.

Here’s our guide to commercial loans for small businesses.

What is a commercial loan?

A commercial loan is any type of finance that is designed for businesses, rather than individuals.

Depending on the lender, business loans usually range from £1,000 to up to several million pounds, with repayment terms varying from a month to 15 years.

What can business loans be used for?

Commercial loans can be used for almost anything, as long as it is business-related. You might require finance to expand your business premises, buy more stock, or keep cash flow in check, or finance a start-up business until you start to generate income. Loans can also be used to support the business during short-term, temporary cash flow issues.

How do commercial loans work?

Just like personal loans, a commercial loan involves being lent a certain amount of money, over an agreed period. An agreed rate of interest is applied, and the loan is paid back in monthly instalments.

Commercial loans can be secured or unsecured and can be provided by mainstream lenders, such as high street banks, as well as alternative finance providers, such as challenger banks, specialist independent lenders, the government, and peer-to-peer lending platforms.

When applying for a commercial loan, you can use the business’ assets as security if this is needed.

Who can apply for a commercial loan?

Any business can apply for a commercial loan, including both small and large businesses.

It’s worth noting that some lenders will only provide loans to limited companies, and you will usually need to be VAT registered. In some cases, there will be a minimum monthly turnover, while other providers ask for at least two years of filed accounts.

However, there are specialist lenders out there if you don’t meet the criteria of high street lenders and banks.

When you apply for a commercial loan for your small business, you will usually be asked to supply supporting documents, including a business plan, cash flow analysis, and a profit and loss forecast.

Whatever type of business loan you’re applying for, the potential lender will want to see evidence that your business will be able to afford the repayments. Your business credit score will be used to determine your chances of securing a loan, as well as the rate you will be offered.

Types of commercial loan

Secured commercial loan

With a secured commercial loan, the business has to offer assets as security for the loan. This could be equipment, property, or land. Because this type of loan offers reduces the level of risk for the lender, the associated interest rates and repayment terms tend to be much more favourable.

However, it’s important to keep in mind that, if you are unable to make the payments, the asset will be used to recover the debt.

Unsecured commercial loan

An unsecured commercial loan is a business loan that is not secured against a business or personal asset. This can make loans more accessible to businesses that don’t have many tangible assets.

Due to the increased level of risk involved in this type of loan, lenders will usually ask for a longer trading history or a personal guarantee that isn’t tied to a specific asset.

Bad credit commercial loan

If you have bad credit, it may be difficult to secure a commercial loan for your business via the usual avenues. However, there are dedicated bad credit loans available through specialist lenders. These are designed to help businesses with a poor credit history.

However, it’s worth noting that interest rates will usually be higher for this type of loan.

Short term commercial loan

A short term commercial loan is repaid over a short period, usually between 1 and 6 months. These loans are ideal for companies looking for support while they wait for a large payment to come in, for example.

The benefits of a commercial loan for small businesses

If your business needs access to cash, a small business loan can be a great option.

Commercial loans offer a range of benefits for small businesses, including:

  • Support cashflow
  • Spread the cost of investments such as equipment
  • Pay off debts
  • Business expansion

If you’re considering applying for a commercial loan for your small business, it’s important to speak to someone who is experienced in the sector. Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries about commercial loans.

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.

How To Get Approved For a Commercial Mortgage

Posted on by Stewart Hindley

Commercial investment mortgages are designed to enable an individual or a company to purchase a business property as an asset. This type of mortgage is used for a wide range of commercial properties including retail complexes, hotels, restaurants, offices, warehouses, leisure facilities, land for development and public houses.

A commercial mortgage is approved to an individual or company looking to buy a business property, either to rent or to use as their own business premises. Lasting from five  to 25 years, you can usually find a 65-70% mortgage, which is a measure of loan-to-value ratio used to establish how much you will be borrowing in relation to how much the commercial property is actually worth.

If you’re purchasing a commercial building as an investment, the amount of rental income the property will generate is compared to the overall investment amount. As a general rule of thumb, this must not exceed 65% of the purchase price.

Everything you need to know about a commercial mortgage

There are a number of key features that you should be aware of before taking out a commercial mortgage, including the fact that there are no fixed fees. However, you will usually pay a higher interest rate on commercial properties than you would on residential property .

The good news is that commercial mortgages secured by a FCA approved broker typically offer better interest rates than mortgages arranged by individuals  and the interest you do pay on your commercial mortgage is tax-deductible.

Deposits for a commercial mortgage

As with any mortgage, different lenders will have different requirements when it comes to a deposit for a commercial mortgage, so this is something that you should be aware of before applying.

Most commercial mortgages require a deposit of between 30% and 40% depending on the level of risk they deem your project to carry and the type of commercial mortgage you’ve applied for.

What do you need to apply for a commercial mortgage?

Before completing your commercial mortgage application, it’s important to gather the following information so the process can run as seamlessly as possible:

  • Key business information
  • Your personal and or business Bank statements, usually covering the last three to six months
  • Trading figures, usually covering the last three years
  • Proof of identity and address
  • Lease and/or rental tenancy agreements
  • A business plan for financial projections – this will help the lender determine how likely it is that you’ll be able to pay off the loan

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

 

Get in touch to speak to one of our skilled and experienced team. We are always on hand to answer any of your queries regarding commercial mortgages.

Business Support Finance – COVID-19

Posted on by Stewart Hindley

Launched in response to the coronavirus outbreak, the Coronavirus Business Interruption Loan Scheme (CBILS) is designed to support UK businesses during this period of disruption. CBILS provides the lender with a Government backed guarantee of 80%, against finance offered under CBILS with the balance of risk being held by the lender.

CBILS is designed to assist with cash flow, initially by way of a Capital Repayment Holiday (Interest only period) of 12 months or a commercial loan over 6 years, with no repayments in the first 12 months followed by a 5-year loan facility on a full repayment basis.

CBILS will only be made available to businesses that were deemed “viable pre Covid 19” and as a consequence a “robust” case must be made for your new Capital Repayment Holiday or loan based on your pre Covid trading information.

It is important to note that if your financial and supporting information isn’t presented correctly to meet the lenders requirements, this could lead to a decline for support, which may impact on your existing loan covenants when considered against your lenders’ “prevailing” debt service criteria which may give your lender cause for concern post Covid 19.

During this period of uncertainty, we at Stewart Hindley & Partners are here to help you and have direct access to all the lenders’ that offer CBILS and who are accredited by the British Business Bank. https://www.british-business-bank.co.uk/. If for any reason your business is not eligible for CBILS then we can provide other routes to finance to support your business.

Given the record levels of demand that banks are incurring for general advice and CBILS applications, we at Stewart Hindley & Partners are able to offer, on your behalf, support through our own FCA relationships with all CBILS accredited lenders.

As a result, we are able to deal with the relevant Business Relationship Manager directly, to ensure a prompt application, with the best possible outcome given your circumstances and thereby take away the uncertainty by securing a decision in-principle within 24 hours.

If you’d like to discuss how we can assist you with your CBILS application or any other funding requirement during these challenging times, then please don’t hesitate to get in touch with us either via completing the contact form or by calling us directly on 01488 684834.

How Does Property Development Finance Work?

Posted on by Stewart Hindley

Whether you’re a first-time property developer, a professional landlord or a seasoned property investor, there are a number of different ways to secure the finance you need to complete your first or next property development project.

From commercial mortgages and auction finance, through to first time property development finance, it’s important to determine the right property development finance option for your needs.

If you’re struggling to know where to start when it comes to securing finance for your project, we’ve taken a look at some of the options available to you.

First time property development finance

If you’re a first-time property developer looking to purchase your first property, one of the best options for you could be a flexible development mortgage. There are flexible development mortgages specifically for first time private developers, especially for those looking to buy a property with the view to refurbish it to rent it out.

Sources of property development finance

Properties at auction tend to be a lot more affordable than those listed on the market, making them a great way to purchase your first or second property. When you purchase a property at auction, you will usually be expected to pay for it within a month of securing the sale. However, some lenders will offer auction finance known as a short-term bridging loan. This means that you can access funds quickly when needed and refinance the house once the work is completed.

If you are interested in developing a private or commercial property, commercial mortgage options will give you the funds to purchase a commercial property such as a shop, warehouse or office.

Of course, it’s not just the price of the property you will need to take into account when securing finance to put towards the purchase of a property development. You should also consider the amount of refurbishment work that is required and whether or not it is a ground-up development.

Securing property development finance

At Stewart Hindley, we understand that the right investment is crucial when it comes to acquiring the funds you need for your new property venture. Get in touch today to find out how we can help you to obtain the best option for your financial circumstances.

How are GP Practices funded?

Posted on by Stewart Hindley

All of us use NHS services in some shape or form, including visiting our local GP when we feel unwell. But have you ever wondered how GP practices are funded or how a GP surgery works?

Many patients fail to understand that GP surgeries are run like a business and rely heavily on funding to provide a high standard of care to a set number of patients. This is one of the reasons why cancelling GP appointments or not turning up to a GP appointment can have a huge impact on GP’s budget and the services they are able to offer.

How are GP practices funded in England?

Throughout England, GP surgeries receive on average, £152. 04 per person, with England’s 7,543 general practices sharing £9,050,006 million. And this is to deliver care for approximately 59,527,981. These figures are based on data released in the 2017/2018 financial year.

The NHS offers three different types of contracts for GP practices, which impact the services they are able to offer. These may include General Medical Services, Personal Medical Services and Alternative Provider Medical Services.

The amount allocated to each GP practice depends on the type of contract provided.

How are GP practices funded in Scotland?

The way GP practices are funded in Scotland is different to England, following a vote for a new GP contract in Scotland that has changed the way Scottish GP practices are funded.

Set out in two phases, the changes outlined have also had an impact on GP pay structures. Phase one took place in April 2018 when the GP Workload Formula was introduced. The new formula has been designed to re-estimate the number of consultations per patient based on age, sex and deprivation. It has relieved the pressure on the workload of GPs in Scotland as it provides a more accurate reflection of patient inflow and demand.

Phase two is set to be introduced in 2020/2021 and although it is still subject to further negotiations between the Scottish government and GPC Scotland, the plans will aim to introduce a standard income range for GPs with a set pay progression. The main purpose of this change will be to remove the link between the new formula and practice funding.

All GP practices will still be required to submit annual data on earnings, expenses and hours worked to NHS National Services Scotland Practitioner Services.

Why do GP practices need GP surgery finance?

There are many reasons why medical professionals might require GP practice finance, including:

  • If a partner is leaving and the remaining partners need to buy them out
  • If the partnership is increasing and a loan is required to be split between the existing partners in order to dilute their shares
  • If practice improvements or extensions are required
  • If a new practice is being set up

At Stewart Hindley, we understand that the right investment is crucial when it comes to providing primary healthcare. Whether you’re looking for funding for an NHS GP practice or a private surgery, we’ve got the skills and specialist experience to help you secure commercial finance for your GP surgery. To find out more, get in touch.

Coronavirus – Business Help Available

Posted on by Stewart Hindley

As the coronavirus (COVID 19) continues to spread across the UK mortgage lenders have been taking special measures to ensure that borrowers are protected from financial shocks.

Most, if not all, lenders have put in place emergency funding to help existing SME businesses get through this period of uncertainty.

If you feel that your business may come under duress over the coming months, please speak to us now so we can assist you to put in place interest only periods or repayment holidays.

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