Give Your Sme A Deserved Boost By Taking Advantage Of A Commercial Mortgage
Since the financial crisis of the past couple of years, lenders are not so lenient on lending criteria, especially on commercial mortgages. The funds are no longer so available within the economy so lenders are more picky with who they will lend to. The lenders are still lending to businesses, but you'll need to be in good financial stead to be considered.
A commercial mortgage is simply a mortgage on business premises and there are plenty of reasons why it can be a good idea. For a start it's an investment to own the property as it appreciates in value over time. You can also secure other debts against the property and raise funds for further investments and expansion.
Get a Large Deposit Together: A lender wants to see that you are committed and that you don't see yourself as a risk by putting down a good deposit on your property. And remember whatever you put on the property as a deposit will be owned by you outright from day one. So if you put down 50% of the property value you'll own 50% straight away.
A deposit on commercial property is usually much more than on personal property - usually 25-50%. So you will need some good funds built up before you think about buying business premises.
Have a brilliant, well thought out business plan: A well researched, well thought out, realistic business plan will go a long way to increasing your chances of success when applying for a commercial mortgage. Your commercial lender will want to go through the plan in detail.
The most important information to the lender is confirmation that the mortgage will be realistically incorporated into your long term plan, and that your figures are realistic - in other words, that you won't go bust. They will not lend to a business if they are in doubt about how realistic your figures are.
Show that you can responsibly manage debt: One of the best ways to demonstrate that you will keep up repayments on a commercial mortgage is to show that you have responsibly managed other financial commitments. If you have made all your payments on time in the past, it is likely that you will do so again in the future.
If you've been renting business property, then ask your landlord for a reference to confirm that you have never defaulted on rent as this will give you a stronger case. If you have a company credit card or business loan, then it would also help your application if you sent these to the lender with your application. This will show that you've never missed any payments and always paid on time.
Have Business Information To Hand: Your lender is likely to ask for a lot of information about your business before they will lend to you. They can ask anything from information about the Directors to your profit and loss details, as well as any other credit that you business has. Most of this should be detailed in the business plan anyway, but you should know all of the information.
Don't fall into the trap of being asked a question on your company finances and not knowing the answer. Not understanding how your business is performing or its current financial status is not going to give a good impression. A lender will need confidence in you that your business is in good hands, in the hands of someone with fingers on the right buttons and in control of a prosperous destiny. In this situation you can never be too prepared. And being able to give the right answers confidently will gain the trust and confidence of any lender.
A commercial mortgage is simply a mortgage on business premises and there are plenty of reasons why it can be a good idea. For a start it's an investment to own the property as it appreciates in value over time. You can also secure other debts against the property and raise funds for further investments and expansion.
Get a Large Deposit Together: A lender wants to see that you are committed and that you don't see yourself as a risk by putting down a good deposit on your property. And remember whatever you put on the property as a deposit will be owned by you outright from day one. So if you put down 50% of the property value you'll own 50% straight away.
A deposit on commercial property is usually much more than on personal property - usually 25-50%. So you will need some good funds built up before you think about buying business premises.
Have a brilliant, well thought out business plan: A well researched, well thought out, realistic business plan will go a long way to increasing your chances of success when applying for a commercial mortgage. Your commercial lender will want to go through the plan in detail.
The most important information to the lender is confirmation that the mortgage will be realistically incorporated into your long term plan, and that your figures are realistic - in other words, that you won't go bust. They will not lend to a business if they are in doubt about how realistic your figures are.
Show that you can responsibly manage debt: One of the best ways to demonstrate that you will keep up repayments on a commercial mortgage is to show that you have responsibly managed other financial commitments. If you have made all your payments on time in the past, it is likely that you will do so again in the future.
If you've been renting business property, then ask your landlord for a reference to confirm that you have never defaulted on rent as this will give you a stronger case. If you have a company credit card or business loan, then it would also help your application if you sent these to the lender with your application. This will show that you've never missed any payments and always paid on time.
Have Business Information To Hand: Your lender is likely to ask for a lot of information about your business before they will lend to you. They can ask anything from information about the Directors to your profit and loss details, as well as any other credit that you business has. Most of this should be detailed in the business plan anyway, but you should know all of the information.
Don't fall into the trap of being asked a question on your company finances and not knowing the answer. Not understanding how your business is performing or its current financial status is not going to give a good impression. A lender will need confidence in you that your business is in good hands, in the hands of someone with fingers on the right buttons and in control of a prosperous destiny. In this situation you can never be too prepared. And being able to give the right answers confidently will gain the trust and confidence of any lender.
