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What is Commercial Property Finance? Maximum Borrowing Explained

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If you’re a business owner, you know that being debt-free is a good thing. However, to succeed, you need access to finance to seize opportunities and stay ahead of the market. Commercial finance can help you achieve this goal. Commercial loan conditions may pertain to loans taken out by individuals or corporations for acquiring commercial properties or to borrowing by enterprises. Prudent business proprietors, Sole traders and owners of small businesses often prefer to operate without debt, funding their expansion from their earnings. However, there are moments when certain opportunities arise.that can’t be financed out of your rainy-day fund.

There are two main types of business finance: Debt and Equity Business Finance

There are two main types of business finance: debt and equity. Debt finance involves borrowing money that must be repaid with interest, while equity finance involves selling shares in your business in exchange for investment. Both types of finance have their advantages and disadvantages, and the choice will depend on your business’s unique circumstances.

Frequently Asked Questions

  • What is commercial finance?
  • Who can benefit from commercial finance?
  • What are the advantages and disadvantages of debt and equity finance?

Key Takeaways:

  • Commercial finance can help businesses seize opportunities and stay ahead of the market.
  • Debt and equity finance are two main types of business finance, each with its own advantages and disadvantages.
  • The choice between debt and equity finance will depend on your business’s unique circumstances.

Related Posts:

Debt Finance and Equity Business Finance Explained

When it comes to financing your business, you have two main options: debt finance and equity finance. If you’re not looking to give away equity in your business, then debt financing is likely your best option. This type of financing involves borrowing money that must be repaid. There are many different sources of debt financing, ranging from bank loans to asset-based lending.

What is Assets-Based Commercial Finance?

One type of debt financing is assets-based commercial finance. This type of financing is secured by business assets, such as invoice finance or VAT finance. It can also be secured against other hard assets, such as commercial machinery or equipment, or stock. Personal guarantee insurance is available for those who want to secure their borrowing with a personal guarantee.

How to Get a Finance for Commercial Property?

If you’re looking to finance commercial property, we can help you secure competitive rates for a variety of property types, including offices, retail outlets, mixed-use premises, factories, industrial units and warehouses, restaurants and cafes, nursing homes and care homes, development land, portfolio buy-to-lets, and HMOs.

How to Get Property Finance for Offices

This type of finance includes shared office space for the growth of sole-trader businesses and SMEs, as well as co-working spaces. Investors and developers are taking advantage of the market growth led by high-profile branded co-working spaces.

How to Get Commercial Borrowing for Retail Outlets

The landscape of retail is evolving, both in brick-and-mortar stores and online. office developments. 

How to get Mortgage Finance for Mixed-Use Premises

We have lenders who are keen to get involved in financing mixed-use properties, including residential above shops and restaurants. We can also find finance for rural estates that include residential rental properties and small business premises in converted outbuildings.

how to get Property Finance for Factories, Industrial Units and Warehouses

The growth of Online and boutique retailing is providing increased investment opportunities for those interested in purchasing and developing smaller industrial parks. We can partner you with energetic lenders who will be keen to share in your business growth.

how to get Finance for Restaurant & Café Premises

Lenders are keen to support property developers stepping into the growth markets of Easy-going and handy food services, encompassing centralized takeaway centers, continue to flourish. Concurrently, the café industry is witnessing robust growth, with three coffee shops opening every day in the UK, and the number of coffee shops set to overtake pubs by 2030.

How to Buy and Develop Nursing Homes and Care Homes

Identifying potential development lands and securing planning approvals often takes time. From the very beginning, we’re prepared to join you, assessing your financial prospects and assisting you through every phase of development.

how to Finance Land Development Opportunities

Locating development land opportunities and acquiring planning permission is seldom a swift process. We’re always ready to get involved at the outset, to scope out your finance opportunities and work with you throughout the stages of development, from feasibility study through to marketing and sales.

how to get Portfolio Buy to Lets

Advising on portfolio finance is a particular strength of ours. Restructuring finance across your holding can free up unencumbered properties available as security for future finance.

how to finance HMOs (Houses in Multiple Occupancy)

We collaborate with many property owners who are looking into the benefits of purchasing or modifying properties to house more tenants and enhance their return on investment. However, we’re not equipped to provide detailed guidance on licensing regulations.

Contact Us to Discuss Your Commercial Finance Need

We have expertise in procuring commercial funding for property deals in the UK. Let’s discuss your financial requirements over a call, and we can provide you with detailed information via email.

Frequently Asked Questions

What is the typical borrowing limit for a commercial mortgage in the UK?

The typical borrowing limit for a commercial mortgage in the UK ranges between £50,000 and £10 million. However, the amount that you can borrow will depend on various factors such as the type of property, the industry sector, the credit history of the applicant, and their ability to service the mortgage.

What factors are considered when determining how much a business can borrow for a commercial mortgage?

Several factors are considered when determining how much a business can borrow for a commercial mortgage. These include the creditworthiness of the borrower, the value of the property, the type of property, the industry sector, and the ability of the borrower to service the mortgage.

What are the current commercial mortgage rates in the UK?

The current commercial mortgage rates in the UK vary depending on the lender, the type of property, and the creditworthiness of the borrower. However, the rates typically range between 2% and 5% on  top of BOE’s base rate

What are the eligibility requirements for obtaining a commercial mortgage?

To be eligible for a commercial mortgage, the borrower must be a UK resident and have a good credit history. The borrower must also have a deposit of at least 25% of the property value and be able to demonstrate their ability to service the mortgage.

Which lenders offer the best commercial mortgage options for new businesses?

Several lenders offer commercial mortgage options for new businesses in the UK. Some of the top lenders include HSBC, Barclays, Lloyds Bank, and NatWest.

Can a business owner borrow against their existing commercial property to finance a new purchase?

Yes, a business owner can borrow against their existing commercial property to finance a new purchase. This is known as a commercial remortgage, and it can be an excellent way for a business owner to access the equity in their property to finance a new purchase or to improve their cash flow.

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Legal Information & Disclaimer

This site is an information only site. All of our articles are written by authorised mortgage brokers for the only aim of providing great, useful, mortgage and loan related information. We intent to offer the best possible suggestions and guides however can’t always guarantee to be perfect, please use the information at your own risk. We can’t accept responsibility if things go wrong. Please contact us via our contact page if you see anything that requires changing and we will do so as soon as possible.

The articles on our site do not provide financial advice. Instead, they aim to equip you with the necessary information to attain your mortgage objectives. 

** The content provided in this page is correct at the time of writing. Mortgage and loan lender’s qualifying criteria and rules change frequently so speak to an adviser to confirm the most up to date rules and criteria. The content on the website is not specific advice to each reader, and does not constitute financial recommendations.