The commercial leasehold sector is one of the biggest if not the biggest business sectors here within the UK. There approximately 10 million commercial leasehold businesses trading today with perhaps as many as 20% of them changing proprietor each and every year. Businesses of this type trade in the health-care, leisure, licensed and retail sector, most are located on every high street. Many can experience difficulty raising “Commercial Leasehold Loans” to buy or re-finance these kinds of business without some kind of extra security.
Poor support from traditional lenders for this massive market-place comes as an unwelcome surprise to many prospective leasehold business buyers. The plain reality is, that financial alternatives are strictly limited when it comes to raising loans for either the purchase of a short leasehold business or to raise capital to improve or expand the business. The single most important reason that finding a loan in this business sector is so tough is that the length of lease available on the associated commercial property is typically 21 years or less. As mortgage lenders require a minimum period of circa 40 years remaining on any lease after a mortgage loan has been repaid, equity in other property is essential for main-stream lenders to even consider any application for funds. Even with the re-assurance of a “legal charge” over another suitable property many mortgage lenders will still be unable to tender any kind of short leasehold loan, viewing these businesses as high risk enterprises.
To fund this type of venture it is always advisable to find a specialist commercial finance broker with an in-depth understanding of the business leasehold finance sector. The severe lack of competition and therefore limited availability of loan options in this financial area leaves room for some very high cost lenders to operate in this market-place. A good broker will identify a low cost option, avoiding the possibility of selecting the wrong business leasehold lender and therefore what could be a very costly error. In short, leasehold financing definitely does not have to be expensive!