However, there remain options for strong applications, and good relationships along with strong sector expertise can still make the difference in getting a case across the line.
We’re currently seeing quite a few investment transactions, with investor clients looking to buy either commercial or semi-commercial property. Experience is the key to finding a solution for these cases.
A client doesn’t necessarily have to have previous experience in commercial investments, but if they are looking to finance a commercial asset, a track record in at least semi-commercial is useful.
Similarly, clients have options to invest in semi-commercial even if they don’t have semi-commercial experience, as long as they can demonstrate some experience in buy-to-let investing. Another consideration here is the rental track record on the property.
Typically, loans are available for up to 65 per cent loan to value (LTV) or sometimes 70 per cent LTV. In some cases, mainly on semi-commercial where a significant proportion of the asset is made up of residential, loans can be available up to 75 per cent LTV.
Strength of the individual business
Banks are still lending to trading businesses and the maximum LTV tends to be 70 per cent.
The main consideration in lending to trading businesses is clearly the strength of the business. Lenders will factor in whether that business has made use of the Bounce Back Loan Scheme (BBLS), and this is hitting the borrowing prospects for many.
However, if a business is strong and can demonstrate that it can sustainably service its BBLS debt, or pay off the balance, then there are lending options. In addition, the Recovery Loan Scheme continues to run until the end of the year and we are aware of lenders that have funds ready to deploy on this scheme.
In terms of sectors, retail, pubs and offices are still generally out of favour – which accounts for a lot of commercial lending. However, there are lenders willing to lend to businesses in these sectors and it is down to the strength of the individual business.
So there remains opportunities for brokers who want to secure commercial finance for their clients, whether they are investors or trading businesses.
The key is to work with the right partner that has the depth of knowledge, strength of relationships and access to make the most of renewed opportunities in the commercial market.