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Commercial Finance Frequently Asked Questions
We are whole of market commercial advisers and we have excellent relationships with the majority of lenders. Our knowledge of lending criteria and who offers the best rates to fit with your own situation is second to none. We have excellent relationships with both traditional and specialist lenders allowing us to provide a truly independent and whole of market service.
Fixed rates and interest rate management products should be available from most lenders, but these may vary depending on the amount and term you borrow over.
You should be aware that there are likely to be penalties, possibly significant penalties, for early repayment of all or part of the facilities under a fixed rate agreement as lenders have committed to the finance for the term of the fixed rate agreement.
Current loan-to-value ratio is normally up to 75%, but this will depend upon other factors including the industry sector, experience and credit history of the applicant, their ability to service the mortgage and the quality and type of the property.
We can help you raise your deposit and can potentially fund up to 100% of the finance though a full review of your business finance and background. Talk to our team to discuss how we can help raise the finance you need now.
Yes we can, the property will be held in a Self-Invested Personal Pension (SIPP), up to 50% of the value of the property can be released and used for any legal business purpose.
Yes, if you own your commercial property and wish to arrange a commercial re-mortgage to consolidate your business debts, then we can look at this option as long as the additional funds are required for a legal purpose.
Typically the time scale is 6 – 8 weeks to include submitting the application, the offer being issued, the valuation being done and the respective solicitors completing their work.
Yes we will. We will assist you in completing the application form and provide you with a list of other documents that the lender requires. We will then collate all the paperwork, check it and then package the information before submitting it to the lender with our summary report.
Yes. Please ask for full details and a written illustration.
Interest only commercial mortgages tend to be offered by specialist lenders and may be at a higher rate than mainstream commercial mortgage lenders, although most high street banks will consider an interest only period for a short period.
The term can be arranged to suit your circumstances, 20 years is typical, but we can arrange up to 30 or even 35 years.
Lenders in this sector are used to lending for leasehold property so the straight answer is yes, subject to the usual caveats regarding serviceability etc.
The lender would want to know the terms of the lease and may want any onerous clauses removing. They would also warn you as to your commitments regarding continuance of paying rental if you stop trading and cannot sell the lease on.
You also need to consider the term of the lease, and if you are the first lessor. Also, are there any commitments at the end of the term i.e. that may require the lessor to convert the property back to the condition and layout when the initial lease was taken.
Lenders will expect the term of the lease or the remaining period of the lease to match the term of the loan.
However, most lenders would not see any security value in a lease unless it was long term – over 21 or even 35 years.
You should always be able to repay your loan/facility early. However, in certain circumstances early repayment may trigger early repayment penalties e.g. where you have a fixed rate, or where your interest rates/fees at start up or in the early years of the facilities are at a discounted rate.
Generally there are no penalties for early repayment of variable rate facilities. However, some lenders do impose penalties and you should always read the facility agreement before signing it. If unsure, you should ask the lender and/or consult a solicitor.
The amount that you’re able to borrow will depend on a number of factors, including the type of asset you’re looking to buy. We have facilities available that allow you to borrow 100% of the asset value.
We can consider any asset as long as it can be clearly identified and has a residual value.
To give an initial idea of the viability of your application, we would need details of the asset being purchased, including the model, age and any other important information relating to the item. Once you’re satisfied with the terms on offer, the funding provider will require further information.
The asset finance provider will need to do full due diligence on your business performance, credit history and the proposed asset purchase.
We offer funding packages from £10,000 with no maximum facility size.
Your dedicated advisor will run through your current situation, aims and requirements and will advise you of the best option for your business. We will compare not only asset finance providers, but also other forms of finance, as appropriate for your business.
No, we will consider lending for any business, as long as both the applicant and asset are considered suitable security to our funding partners.
No, we only currently offer asset finance to UK-based companies.
In most cases, we are able to provide funding with no need for additional security. In the unlikely event that additional security is required, we will let you know as early in the process as possible.
Invoice financing is a way that small businesses can maintain cashflow while waiting for customers to pay for goods or services. Although there are several different ways that invoice financing works, in simple terms it’s borrowing against the value of unpaid invoices. A third party - often a bank - will, in effect, buy up your invoices so that you can access the money you are owed quicker. The bank will pay a percentage of the invoice upfront, with the rest settled once the customer has paid for the goods or services your business provided.
This type of financing can be helpful as it allows you to pay your employees and suppliers, or to reinvest and grow your business, without having to chase overdue payments from customers. It’s often used by businesses that could otherwise run into short-term cashflow difficulties.
Invoice financing works in the same way as many other financing products. A bank (or other lender) will lend money to your business up to the value of an invoice or a number of invoices that you send to your customers. This invoice loan will be offered in return for a fee, which is calculated as a proportion of the value of the invoice or invoices.
There are two main types of invoice financing typically available to UK businesses:
Invoice factoring - Also known as debt factoring, this is when a business sells its unpaid invoices to a bank or other lender. Technically, this is not a loan, as the financier buys the invoice or invoices and then immediately pays a proportion of the value of the invoice - typically around 85% - with the rest paid once it collects the invoice payment from the original customer. In return, the ‘lender’ will charge an invoice financing fee and/or interest to your business.
Invoice discounting - This is a more traditional type of loan, whereby a bank will lend money against an unpaid invoice. With this type of financing, you would still be responsible for collecting payment from your customer, and then would use that money to repay the loan. As with factoring, the lender will charge either interest or fees for this service.
Is your business eligible for invoice financing?
Although different lenders have different lending criteria, if your business meets the following conditions, there’s a chance it will be eligible for invoice financing:
It’s set up as a limited company or LLP.
Has a turnover of at least £50,000.
Is actively trading with other businesses and offering standard credit terms.
That said, some lenders will insist on a business having a minimum number or value of invoices per month before they enter into a financing agreement, so it may be worth making sure you are likely to be using invoice financing regularly before going down this route.
Import invoice financing is slightly different from the standard forms of invoice financing described above.
Import invoice financing can be used by businesses that import goods to sell on to its customers. A bank - or other lender - will effectively ‘own’ the imported good until the importer sells them on to its customer.
The cost of importing, and the delay between paying for those goods yourself and receiving payment from a customer, can be offset through this arrangement, helping businesses that rely on imports maintain a reliable cash flow.
Invoice trading is another variation on invoice financing, available to UK businesses. It is similar to invoice factoring, in that a business sells its invoices to a third party, which is then responsible for collecting payment. The difference is that invoice trading is done on a peer-to-peer basis, meaning a business can sell its invoice to any investor via an online auction, cutting out traditional lenders such as banks.
Invoice trading is used by businesses looking to ease short-term cash flow issues, who match with investors happy to take on the risk of chasing invoices in exchange for a good short-term return.
Invoice financing is a great way for a business to maintain smooth cash flow by removing the need to wait for customers to pay before you can access funds. If you choose to use invoice factoring, it can also save you time and resources chasing payment, as the responsibility is passed on to your lender.
Many businesses also appreciate the flexibility of invoice financing, as they can scale up or down how much they use it, depending on their agreements with lenders. For small businesses looking to invest and grow, such flexibility can prove invaluable.
The main disadvantage to invoice financing is that it will cost you. All lenders will charge either a fee or interest, or even both. While access to cash may be more important to your business, it is important to understand that you will not receive 100% of the value of your goods or services if you use invoice financing. In addition, some businesses may find it harder to access other forms of financing if they use invoice financing.
There are a number of alternatives to invoice financing, such as traditional bank loans, asset based finance, asset leasing or bridge loans, and your eligibility for any of these options will depend on the size and credit worthiness of your business. If you choose another type of financing option, some lenders may require you to put up more of your assets as security and might also tie you into longer-term arrangements.