Business finance

There are many different forms of business finance, but in this instance, it may be helpful to examine in closer detail one of its most common forms – borrowing against the equity in a property from which a business is already trading.

Businesses owning their own premises

If your business owns its own premises, you may be able to use these as security for:

• purchasing new or additional premises for your business;
• refinancing – or, effectively, remortgaging – an existing loan on the property to secure a better rate of interest or to alter its terms in some way (by lengthening the term of the loan, for example, to reduce monthly outgoings);
• buying out an existing partner or equity investor in your business; or
• increasing the availability of working capital for use by your business.

Businesses operating from leased premises

As a business owner, you may operate your business from leased premised – so in other words, you are the leaseholder or sitting tenant. It can be common for the leaseholder to be given the opportunity to buy the freehold of the premises from which they operate their business. And of course, funds are needed, to make that purchase.

If you are a leaseholder and you are given the opportunity to buy the freehold of your business premises, contact us at Funding Track, we may be able to help you raise the necessary funding.

Interest rates and loan terms

The secured business loans or commercial mortgages we help to arrange typically attract interest rates in the region of between 3% and 5% above the Bank of England base rate.

Loan terms are generally in the range of between 10 and 20 years, although sometimes a term of up to 25 years is available.

We structure and tailor the business loans we arrange to meet your precise business needs.

It is important that the term, the interest rate and the monthly repayment are structured correctly to enable you to plan your budget with confidence and manage cashflow effectively.

A longer-term business loan such as this may be less flexible than say a bank overdraft, but interest rates are invariably cheaper and you can plan your cashflow with confidence because you know the monthly repayments for the loan.

A further advantage is that on a business loan or commercial mortgage the interest payments on the loan are a fully tax-deductible expense in running the business, which makes it a very beneficial way of borrowing money within your business.

Eligibility

Unlike many other mortgages, lenders typically have no set criteria for advancing business finance loans, but consider each application on a case by case basis.

What this means is that your application – and the interest rate you may finally be offered – depends on the lender’s assessment of the viability and strength of your business.

Given that each application is considered on a case by case basis, you might consider it even more important to draw on the experience and expertise of a specialist in arranging business finance – such as ourselves here at Funding Track.