Business Loans UK

Business Property Loans:

· The purchase of business premises
· Expansion
· Residential and commercial investment
· Property development

The interest rates for business property loans are normally higher than those of standard residential home loans as businesses are seen as a higher risk by many lenders. The lender’s decision will depend on your current financial circumstances - some lenders may accept applications from people who have an adverse credit history but the majority of lenders will require a positive personal credit rating and clear evidence that your business is credit worthy. The lender’s decision to grant you a business property loan will also depend on your current business circumstances. Business/commercial lenders will expect your business to be stable and profitable; after all, they are unwilling to loan money to someone who is unlikely to have the funds to pay them back. Many lenders will ask to see your business plan and long-term financial projections before they agree to loan you money. This is to assure the lender that your business has and will continue to have the necessary funds and ability to make repayments on the loan. Any lender will want to be sure that your business is on a sound financial footing before agreeing to a business property loan. Their main concerns are that you will be able to repay the money and that the property is worth enough to cover the amount borrowed if you default.

Business property loans are available in two interest options, variable rate and fixed rate (although the majority of lenders will only offer variable rate for business property loans). Variable rate means your interest rate will rise and fall in accordance with the Bank of England’s base rate. Hence if interest rates rise you will be charged a higher rate of interest, and likewise if interest rates fall you will be charged a lower rate of interest and so your monthly repayment amounts may vary. Fixed rate, as the name suggests, means your interest rate is fixed (stays the same) so you will be charged the same amount of interest, and hence your monthly repayments will stay the same no matter if interest rates rise or fall.

Business property loans are generally secured loans (few lenders will offer unsecured business property loans as this is too much of a risk for them). You will need to secure the loan against a high valued asset you own, usually your home or the business property itself, to reassure the lender that they will receive repayment of the loan one way or another, either by full repayment of the loan by the borrower, or repossession of the secured property which will then be sold so that the lender can recoup their money. This does mean that your home or business property is at risk if you cannot make repayments on the loan – so check you have adequate finance before you sign anything.