The first decision you need to make for your business is whether to buy or lease your business premises, by the fact you are reading this we may assume that you have decided to buy. This is a good decision with many advantages for the future of your business. There are many competitive commercial mortgages available today, and repayments could well to be similar to rental outgoings or maybe even cheaper.
Once you have acquired your commercial premises, overtime the value of this asset is likely to increase providing your business with a capital gain. Your business mortgage repayments are tax deductible, and with the right permission you may even sub-let part of your premises to generate an additional income. Whilst with a commercial lease; that you may of been considering, you will commonly be tied into a long term arrangement that may not ended early, where as with a commercial mortgage you can sell your property at any time.
Most banks and building societies offer commercial mortgages and each lender will have their own lending criteria. Most lenders will be looking for a positive credit rating, although it is possible to find a good deal, even with an adverse credit history. Usually a commercial lender will expect an existing business to be stable and profitable. Many will ask to see long-term financial projections, business plans and previous years’ audited accounts but not all.
Most business mortgage providers lend 70% - 80% of the purchase price of the premises, although it may be possible to secure more with personal guarantees. Most commercial mortgages are based on a term of 15 years or more.
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