Long term commercial finance, in the form of a commercial mortgage, offers many small and medium sized enterprises (SMEs) the ability to invest in their business with new technology, new or refurbished premises, or increased stock levels.

A commercial mortgage is also an excellent way to finance the purchase or start up of a new business venture which will require its own premises.  

In the past, it tended to be only larger organisations with a proven track record who could obtain commercial mortgages.

A large number of younger/smaller businesses were unable to obtain this type of commercial finance and, as a result, many businesses have been forced to rely on expensive short term finance or left to use their owners’ residential property as security.

Fortunately, this gap in the market is now being targeted by specialist commercial lenders who are willing to serve the commercial mortgage needs of SMEs and owner-managed businesses.

Small business borrowers, self-employed traders, and partnerships often find it difficult to raise commercial mortgage finance.

This is because institutional lenders have focused on larger, corporate lending secured on the tenant covenant of investment properties. This sector is seen as being low risk and so has become a favourite of many traditional lenders.

In addition, the lending criteria of many mainstream commercial lenders disqualify applicants who do not have three years’ audited account, those without business plans, or those with a less than perfect credit history. As the UK workforce migrates more towards self-employment, greater flexibility is required from lenders to assess each case on its individual merits.

Until recently, this flexibility has been hard to find.