How to Get Short Term Business Finance Fast

| October 28, 2013

What is a Commercial Loan?

A commercial loan is available to businesses that need short term funding for:

Shops, factories to build or rent, warehouse, land for commercial use of any type, developments of land for houses/flats and development of all types of commercial property. The loan is usually secured on the property. Commercial lenders will approve loans for buying property, buying a business, or the expansion of your existing business. ?Their decision is based on the ability of your business to make the repayments and has nothing to do with your personal finances, although they may look at your personal credit rating. The finance is usually secured against the commercial property.

Be Prepared

Part of the secret of getting a quick response is to approach the lender with a full package of information. ?This should include:

  • Profit and loss accounts for the business

  • Projected accounts including the new acquisition

  • Business plan for the future, probably what you expect for the next five years

  • A professional valuation of the property or business you want to purchase

Most lenders will consider these and any risks involved before they quote you an interest rate, the higher the risk the higher the interest.

The Amount You Can Borrow

You only have to look at the Internet to see there are many companies wanting to lend you their money, or brokers wanting to source a lender for you. ?How much and how long they will make the loan for depends on the lender, but a rough guide shows that the loan can be:

  • 75 ? 80 % of the valuation

  • Generally has to be more than ?25,000 but upper limits vary greatly

  • Can be spread over a period from 1 to 40 years

  • Can be a variable, capped or fixed interest rate

The Bank Of England publishes quarterly reports regarding the trends in lending, the data for which is gathered from lending institutions nationwide.

Brokers Can Help

Brokers will do a lot of the groundwork for you; they can help prepare the financials for presentation to the lender. ?They also have a network of lenders they use and will match you with the one they feel is most appropriate for the project and with whom they have a relationship with. ?Fees for the service are paid by the lender, usually a commission on successful applications. ?Brokers have a wealth of knowledge and experience that help make the whole process less stressful for you. Notwithstanding this, there are advantages in going to a principal lender direct if you have good financial records.

Banks Versus a Specialist Commercial Lender

Banks are not very forthcoming with lending these days and have reduced the overall amount they are willing to lend in an effort to build their capital reserves and reduce risk. ?Speak to anyone in the commercial property sector and they will tell you that the hardest thing is getting the finance to buy. ?Banks often take a long time to agree or refuse your application and in that time the deal could be lost.

What if the Bank Calls In Your Loan

David Levitus, COO of Commercial Loans Ltd says “At the moment there is a big requirement for short term bridging loans. These loans allow the property owner, the borrower, to re-finance the loans which they had with their bank, but which the bank has called in. Loan terms range from 6 to 18 months with competitive rates starting at 1.25% per month. ?The loan gives the borrower additional time to look at their options, whether it is to sell the property or to put in place a commercial tenancy and then re-finance on a longer term with a main stream lender.? ?Bridging loans of this type also appeal to property investors looking to buy commercial properties, renovate them and find tenants during the 18 month loan period, before re-financing on a longer term. Whatever your needs sometimes you need to move fast and a non-high street lender can sometimes bridge the gap.

How to Get Short Term Business Finance Fast


Category: Business

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