Commercial Property Finance

Lenders appraise every borrower on a case-by-case basis, and rates will be different for every deal. What a lender will charge you will depend on the size of your loan, the type of commercial property you are buying, how much deposit you put down, the complexity of the overall transaction and the risk for the lender. 

As with any type of lending, the key to securing the best commercial property finance rates is to present your situation in the most favourable light. What you may lack in cash flow you may make up for in assets and vice versa. 

Where your property is located may also play a part in what you pay. There are now many different specialist commercial property financial companies focusing on particular types of property, specific size companies, and even specialising in regions such as London, for example. Your broker will be aware of all the lenders in the market and their inclinations, specialisations and the rates they offer for certain types of property or transactions. When Enness knows of a lender that has a preference for a commercial property purchase you are making, these providers will be Enness' first port of call.

Your business's financial track record will also influence what you pay. A successful company that has turned a YoY profit for five years and is looking to grow by moving into new premises may be able to command lower rates than businesses with a less solid track record or who have been operating for less time. 

Commercial property in all major cities and business hubs remains a source of ripe opportunity for many investors. However, any time there is even a hint of economic uncertainty, many people will rush to assume lending dries up and that it’s impossible to source capital. The reality is that there is always finance on offer for the right lender profiles and for the right deals, no matter the state of the markets and economy.

Whatever the economic outlook, Enness has access to the players that have capital and desire to lend.  

Both fixed and variable interest rates will be on the table when it comes to commercial property loans. Your broker will discuss the options for you and help you understand what will make the most sense for your business. Just like you would for a residential loan, commercial property loans require that you make monthly repayments to your lender. 

Commercial fund lenders will expect you to use revenue generated from the business to pay the monthly loan repayments on your commercial property. As a result, lenders will seek assurance in your business' ability to repay your loan when you are at the negotiation stage. 

Practically, lenders will want to see that:

• There is substantial future demand for your products or services 
• Your business is on firm financial footing, and it turns a profit
• You can showcase that your company has a record of having solid financial results 
• You have a good case for a commercial property investment

For these reasons, the way you present your case for lending and the strength of your case will be the foundation of getting the best deal. 

If you need a loan on a commercial property and have a profitable business but haven’t been operating for long, you will still have options. In these cases, your personal profile may also influence your deal. If you are a high-net-worth individual, you may also be able to put forward personal guarantees to provide more reassurance to your lender and get the go-ahead on a commercial property loan. 

Amortisation is often calculated against a longer period than the duration of your loan when it comes to commercial property finance. Practically, this means that your monthly repayments for the period of the loan will be much lower. For example, you might negotiate with your lender to amortise your loan over fifteen years, even though the loan term is just three years. This method will bring your monthly costs down for the loan term, which can be beneficial while you get things going in your new property or investment.

However, if you opt for this type of financing, you will then be required to make a "balloon" repayment at the loan term. Balloon payments essentially postpone a large portion of the cost of your commercial property by making it due at the end of the loan, thus reducing your monthly charges. Balloon payments give your business time to save up to cover the cost of the property or negotiate long-term commercial property finance. How you approach your balloon payment will depend on your circumstances: you might opt to save up to cover the cost of the loan, or you may choose to refinance. Enness will be able to help you understand your options and what will be best for your business.

Enness brokers commercial property loans valued at several million pounds. In this part of the market, hand-brokered deals and finance structured around your business’ needs make all the difference.

What you can borrow will depend on your business and your financials, but there is an appetite in the market to lend against properties of multiple millions of pounds. Enness can source deals in the region of 80-85% LTV for the right deals.

When it comes to securing the best commercial property rates and terms, as with other types of financing, it is often a case of who you know, not what you know when it comes to obtaining the best rates. 

Enness is entirely independent and whole-of-market, and as a result, your broker is free to cherry-pick the best deals in the marketplace. Your broker will have extremely close relationships with those operating in the sector. They will know what every lender will need, what will provide assurance, when they need it and how it should be presented. Enness will also work alongside you to create short, medium, and long-term financial repayment plans suited to your business' needs. 

As well as financing new property ventures, Enness can also assist you with refinancing options to address potential cash flow issues. It may be something as simple as extending current finance terms, switching assets as security, or there may be a short-term requirement for additional funding. These issues should be addressed sooner rather than later to avoid paying premium interest rates when looking for distressed funding further down the line.

Speed is often of the essence when it comes to a commercial property purchase. You may be seeking commercial property finance because you want to grasp an opportunity that has arisen suddenly. Alternatively, you might face a pressing need and must make a purchase quickly: you need premises to keep up with exponential growth, your business needs to move, expand into new areas, or new property is on the market that would make an ideal investment.    

Whatever your motivation for making a commercial property purchase, navigating lengthy discussions with lenders is likely to be frustrating. Especially when you need a large loan, there will be no way of knowing if the lenders you are approaching can even cater to your needs, meaning you will be spending time requesting offers that might not even be a possibility. You will also spend significant time trying to reach the right departments and contacts, especially at larger lenders. Ultimately, anything that slows down your access to capital has the potential to impact your business negatively and needs to be avoided at all costs. 

Enness can source deals in as little as 24 hours. With access to all the lenders in the market, Enness will know exactly where to go to get you the best deal – you won’t have to waste time approaching lenders that can’t lend large amounts. You can also bypass lengthy discussions trying to get your proposal in front of the right teams and decision-makers. 

With a reputation that opens doors, Enness will reach out to the right players from the get-go, and negotiations will get straight to the point. Your broker will be able to generate healthy competition between lenders, and you can expect things to move exceptionally quickly. 

As well as sourcing the best offers for you within a business day, Enness will also act on your behalf at every point in the transaction. On hand 24/7 to drive the deal forward, your broker will remove roadblocks, keep all the different parties focussed and see the transaction through to completion for you on time.