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Commercial property finance
If you run a small business, you might need larger premises to keep up with growing demand. Business finance could give you the working capital you need for expansion.
Whether you're staying put and adapting your current space, or moving to new premises altogether, here’s what to bear in mind.
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What are commercial premises?
Commercial premises are types of property used for business purposes. They are specifically designed and equipped to suit commercial activities, such as:
- Office space
- Shopping centres
- Warehouses
- Hotels
- Hospitals
Can you borrow money for a commercial property?
If you’re looking to grow your business, expanding your premises or buying a commercial property can be a great next step. It could also be a good investment to generate profit in the future.
It can, however, sometimes require funding you might not have. Commercial property finance can help you access the money you need to cover costs such as:
- Your mortgage deposit
- Stamp duty
- Legal costs
- Refurbishment
- Utility bills
The main types of commercial property finance are:
- Mortgages. Like residential mortgages, these involve paying a deposit followed by monthly payments plus interest. Commercial mortgages typically run for 1-30 years. These often have higher interest rates than residential mortgages due to higher risk for commercial lenders.
- Bridging loans. This is short-term finance that can be used to purchase premises until long-term finance can be secured. These usually cover up to 18 months, with interest rates often higher than commercial mortgages.
- Secured and unsecured loans. A highly flexible option, these can be used to purchase a property outright or as a deposit for your mortgage. Depending on the type of loan you choose, you may need to use an asset from your balance sheet as security.
Is a business loan cheaper than a mortgage?
The cost will vary depending on several factors, including interest rates, terms, and fees.
Commercial mortgages often have lower interest rates due to the security offered. However, business loans offer benefits that can outweigh the cost for many businesses:
- Greater flexibility. You can use funds for other purposes such as working capital, equipment purchases, or expansion
- Shorter approval times. So you can get faster access to your funds.
- Unsecured business loans don't need collateral. They are more accessible for businesses that don’t have many assets or prefer not to offer them.
- Adaptability. Shorter terms of business loans can help you avoid long-term debt and pivot to changing market conditions.
For businesses seeking fast, flexible funding without the complexities and long-term commitment of a mortgage, a business property loan can be a practical alternative.
Business loans for a premises move
When leasing or buying a freehold property, ensure the space allows room to grow so you can:
- Take on new hires
- Store products and stock
- Have a dedicated space for client meetings
Even if you do take these precautions and find a space you love, small businesses can quickly outgrow their premises. Finding the funds to facilitate a move can, at times, prove tricky.
If you're looking for ways to fund the relocation of your business to a larger space, consider how a business property loan could provide you with the working capital you need to pay for the initial deposit on the new premises, plus costs associated with moving
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How much deposit do you need for a commercial property?
The size of the deposit needed when buying a commercial property can vary. However, you can expect to pay between 20-40% of the value of the property. Keep in mind that this figure can move up as well as down. Influencing factors include:
- The nature of the business
- Your personal and professional financial histories
- What commercial lenders think you can afford to borrow
Get an instant estimate of your monthly repayments with our commercial property loan calculator.
Business loans for premises expansion
Want to stay in the premises your business already occupies? You could upgrade and adapt the space to cater to your growth plans.
This could be by building an extension or completing construction work to better use the existing space. If you're leasing, be sure to carefully check the covenants in your contract before beginning works. This applies even if it's a simple facelift, such as updating the interior of a high street shop or café.
If you're making significant changes, such as to a family-owned farm or hotel, refurbishments can often take months. Therefore, these should be completed during low season. This can impact your profits, so it's important to plan ahead to cater for a potential loss of income during the works.
Luckily, several alternative finance options are available to you for expanding your premises. This can come in the form of either unsecured or secured commercial loans, which will:
- Give you a boost of working capital to pay for the works
- Provide you with a safety net of finance to keep things ticking over
This way you can protect your cash flow while your business undergoes expansion works.
Customer success stories
Olivia Crighton, Founder of Hackney-based Glasshouse Salon, was ready to grow her business. However, she was struggling to find a finance provider who would lend her the funds to move her hair salon. After her broker introduced her to Fleximize, Olivia was able to:
- Move to larger premises
- Take on double the amount of staff
- Enjoy better facilities.
Listen to her experience in her own words below.
Olivia Crighton used a Fleximize business loan to move her hair salon to larger premises
The biggest challenges for me were raising capital and finding the right space for us.Olivia Crighton
Premises expansion loans with Fleximize
Whether you're carrying out works to refurbish your current business premises, or are moving to a new space altogether, Fleximize can provide you with the working capital you need to expand your premises.
What's more, due to the flexible nature of our funding, and the fact that we offer top-ups, you could use part of your loan for relocation and some for carrying out improvements to the space to adapt it according to your needs.
Here are some of the key features of a Fleximize business loan:
- Business loans of £5,000 – £500,000
- Unsecured and secured borrowing options
- Flexible repayment terms of 3 – 60 months
- Speedy application with minimal paperwork
- Approval and deposit in as little as 24 hours
- No hidden fees or early-repayment penalties
- Interest charged on a reducing balance, not the total loan amount
- Repayment holidays and top-ups available with all loans
- Exclusive discounts on industry-leading business services
Apply for a premises expansion loan
Considering a premises move or expanding your current business space? Fill out our simple online application form to get started.
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