Best Commercial Finance

With the banks continually tightening their lending it is becoming harder for small businesses to obtain the finance they need.

From today we are able to offer unsecured business finance from £3,500 to £150,000 dependant on circumstances. This product is ideal if you cannot raise funds through more conventional methods because of a reluctance to lend by the banks.

Please visit our main website http://www.bestcommercialfinance.co.uk for more information on unsecured business finance.

On the 14 January 2008, the Government formally announced a package of support to address the cash flow, credit and capital needs of businesses.

The following is a copy of a letter sent to the National Association of Commercial Finance Brokers (NACFB) who have asked Best Commercial Finance Ltd, as a member, to help disseminate the details of the Governments proposed assistance to small and medium sized businesses (SME’s).

Best Commercial Finance Ltd are delighted to be able to do this and will be actively involved in assisting businesses apply for inclusion within the various schemes.  We believe the Enterprise Finance Guarantee will be of particular interest to existing and new clients.

The following is an extract from the letter issued by Peter Mandelson – Secretary of State for Business, Enterprise and Regulatory Reform (BERR).

REAL HELP WITH FINANCE
 
Today we are launching a package of support to address the cash flow, credit and capital needs of businesses.
 
As we announce these measures, we really need your help to ensure that as many businesses as possible are aware of the support available for them at this critical time.  I would be grateful for your assistance in disseminating this information as widely as possible, through your websites, newsletters, and any other channels that you think most appropriate.
 
This package operationalises and builds upon the commitments we made in the Pre-Budget Report, providing:
 
• £1bn of guarantees supporting £1.3bn of lending to smaller businesses;
• Up to £10bn of guarantees supporting £20bn of working capital
• £75m capital (£50m from HMG and £25m from banks) fund to invest in businesses who need equity or quasi equity.

Enterprise Finance Guarantee
 
In the PBR, the Chancellor announced a £1bn Small Business Finance Scheme. Today, this goes live as the Enterprise Finance Guarantee.
 
This 75% guarantee for loans will support bank lending, of 3 months to 10 year maturity, to businesses with a turnover of up to £25million who are currently not easily able to access the finance they need. This will enable them to secure loans of between £1,000 and £1m through the government guarantee, available up to 31 March 2010.
 
The guarantee will be available through the following high street banks from today - Barclays, Clydesdale/Yorkshire Bank, HBOS, HSBC, Lloyds TSB, RBS/Natwest and Northern Bank. It will become available from other lenders if they wish to apply.
 
Working Capital Scheme
 
In the PBR, the Government also announced a working capital scheme for smaller exporters. Based on the risk analysis we have done since that announcement we believe that the model can be expanded for working capital guarantees for all firms of turnover of up to £500m. So the Government is today ready to make available to banks guarantees of up to £10bn for up to 50% of the working capital on a £20bn portfolio of loans.
 
Banks are invited to submit their portfolio of existing and projected new or refinance loans for approval under the guarantee. We have received declarations of interest by Barclays, HSBC, Lloyds TSB and RBS. With the support of participating banks, we hope the first £1billion guarantee tranche of the scheme should be operational by 1st March. Use of this facility will of course be subject to final terms guaranteeing value for money.
 
By guaranteeing portfolios of working capital facilities, this package will release capital held by the banks against these portfolios.  The banks have agreed they will make commitments to re-deploy this capital in order to increase all types of lending above their current plans, to businesses with a turnover of less than £500m.  The guarantee will ensure banks do not reduce or withdraw working capital lines on renewal which, being short term, can be easy to cut. It will also ensure that there is new capacity by banks to lend to UK businesses, who are suffering from the withdrawal of certain lenders from the market.
 
Capital for Enterprise Fund
 
In the PBR, the Chancellor announced a £50m debt for equity fund. Government is announcing today that this Capital for Enterprise Fund will provide £75 million of equity, made up £50m of Government funds and an additional £25 million from Barclays, HSBC, Lloyds TSB and RBS.
 
The purpose of the fund will be to provide equity and quasi equity of £250,000 to £2 million for companies under the EU SME definition, i.e. of turnover of up to €50 million, who have viable business models and growth potential in need of long term capital.
 
Information on all this support can be accessed via a dedicated web portal at www.businesslink.gov.uk/realhelp. This provides details including contact names and numbers for each bank and for the local Business Link. To register interest for the Capital For Enterprise Fund, businesses should contact 0845 459 9780.
 
Time to Pay

As announced in the PBR, since November, businesses experiencing cash flow difficulties can also get help from the HM Revenue & Customs (HMRC) Business Support Service.  Businesses worried about being able to meet tax, National Insurance, VAT or other payments owed or coming due to HMRC can call the Business Payment Support Line, seven days a week, on 0845 302 1435. 
 
HMRC staff will review discuss temporary options tailored to the business needs, such as arranging for payments to be made over a longer period. HMRC will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.  This is one more way in which Government is providing real help for businesses to manage their cashflow and free up working capital they need.
 
Credit Insurance

The Government is committed to targeted support for businesses to help them through the current economic climate. I am aware that reduction of credit insurance can exacerbate financial difficulties already being felt by firms. My Department is discussing with trade credit insurance providers a government scheme to help companies affected by reductions in their credit insurance. There will be a further announcement on this as we progress.
 
The Government will continue to support and provide funding and capital to the bank system to ensure that banks are able to support businesses.  Small businesses are the lifeblood of the economy – employing  60% of the private sector workforce and contributing over 50% of UK turnover.   We remain committed to doing everything we can to help them through the current economic difficulties.
 
As always I am grateful for you ongoing support.
Yours sincerely
Peter Mandelson
Secretary of State for Business, Enterprise and Regulatory Reform

Best Commercial Finance will be making further details of the scheme available shortly.

Wherever you are in the country, you would not have to look too hard in order to find a development project that has failed or come to a grinding halt.

But why is this, surely in any market, there is a profit to be made?

The reason that many of the large developers have had to stop building is quite simple, they “banked” the land at historical prices, after all the strength of many of these PLC builders and share prices were based on their land banks.

Well in today’s market of falling end values and rising input costs; there is no profit based on the price that they paid for the land; potentially years ago! In fact, some of this land will be sold at a loss, as it is better option for some large builders.

In the current market, there are losers, however where there are losers, there must also be winners. This appears to be the time where the small scale developer is king of the jungle. 

Small half finished developments/ refurbishments, land at sensible prices, distressed sale ex-BTL properties needing refurbishment, repossessions; all going like hot cakes.

Where would you get a Development Loan from at the moment?

Property Development Loans are not as easy to find as they once were, the money is still out there and the lenders still need to lend. You just need to know where to look.

Here are some tips on getting a Property Development Loan:

Use a commercial finance broker who is a member of the NACFB (National Association of Commercial Finance Brokers).This organisation has standards to which its members must adhere.

Lenders are concerned with risk, so in the current climate they are going to consider any application very carefully. First time developers can still obtain a Property Development Loan, if the proposal looks good and the lenders has confidence in your ability to deliver. Wherever possible use an experienced broker, who will be able to communicate your proposal in the right way, ensuring that it ticks all the lenders boxes. A good broker will structure your proposal from a lenders viewpoint, giving him as much comfort as possible.

Acquiring finance for a property development project can be a time consuming and complicated affair. Tracking down the right lending product which fits your requirements most closely can be difficult, doubly so if you have never applied for property development finance in the past. Below are a few tips designed to give you a head start with this complicated process.

• Prepare documentation in advance, no matter which lender you approach, you are going to be asked to produce a quantity of supporting documentation to accompany your application for property development finance. You will certainly be asked to supply a set of fully audited company accounts, unless you are a first time constructor. You will also be required to submit a business development plan which shows how the development project will prove to make a return on investment, and how you plan to cover any monthly repayments until the project is complete.

• Be prepared to prove the viability of your development project, it may be prudent to prepare reports which demonstrate the financial success of similar projects in the area you have chosen to begin your project, every lender is going to want to make sure that the risk to them is minimal before they approve your application for property development finance.

• Double check your costing and financial forecasts, make sure you detail every potential costs, both for materiel costs and professional fees, also factor in the cost of labour. By showing that you have planned to a significant level of detail you will assure the lenders that you have performed adequate due diligence and are fully capable of managing the construction project.

• Approach multiple lenders, you may well find that some lenders will be keener to supply you with property development finance than others, the commercial lending market is driven by a far different set of lending criteria than the personal finance market, these criteria can differ significantly between lenders.

• Do your homework, try to find out which lenders have offered property development finance for projects similar to your own recently, some lenders specialise in certain facets of the market, it makes sense to approach a lender with a pre-disposition for your type of construction project than one who is historically less likely to give you a positive outcome.

Although these few guidelines will help anybody who is thinking of applying for property development finance direct with lenders, it is highly advised that you seek the advice of a professional commercial finance broker. By employing your own broker you will have a new member of the team who is capable of assisting you to prepare the documentation that is required to accompany your application for property development finance, and then approach multiple lenders on your behalf.

A good broker will act as your spokesman with the lenders and handle the entire application process, keeping you abreast of the situation at all times and dealing with any problems which crop up.

Development loans can be loosely described as a type of finance that is used by a property developer to either construct new property, or renovate an old derelict property. As with any form of commercial finance, the application process is often complex and can take quite some time. People often mistakenly believe that developments loans are easy to apply for, in a similar fashion to personal forms of finance, this is simply not the case. Any application for commercial finance will be subject to a far different set of lending criteria to personal finance, and it is absolutely crucial that the person or company making the application is fully aware of these criteria and is capable of dealing with the lenders on equal terms.

Development loans for new construction projects actually consist of a paired package of loans, which work together to fund the development project. The first of these loans is the land loan. And is used to finance the purchase of the actual land plot the construction project will develop, this loan will usually stay active for the entire length of the project. The second loan is the development loan proper, and covers every cost associated with the actually construction phase, including all raw materials, professional fees and labour costs.

For development loans which are going to be used to finance the renovation or re-modelling of an existing property, things are usually more straightforward, one particular difference of development loans used for this purpose is the fact that the donor building will often contain enough equity to cover the loan value, meaning the lenders are going to see it as a reduced risk.

Whichever of these two purposes is the reason for your application for either type of development loans, you need to be aware of the fact that the application process is often very complicated. You will definitely be required to submit a well presented business plan which will prove the overall viability of the construction project. If you are an existing corporation you will also be asked to submit a set of independently audited corporate accounts along with full disclosure of shareholder and company officials.

It is highly recommended that you make use of the services of a professional commercial finance broker when seeking the best in development loans. A broker will have the knowledge and experience required to make sure that your application is as simple and streamlined as possible, they will be able to assist and advise upon the required documentation that will need to be giving in support of your application, and they will be able to speak the same language as the lenders.

Additionally, a commercial finance broker has access to a far greater number of potential lenders and a larger range of borrowing products than somebody applying directly. As your spokesman to the lenders, your broker will keep you advised of how your application is progressing as well as dealing with any problems which may arise.

We have today added some new information to our website regarding the Small Firms Loan Guarantee Scheme (SFLG).

The Small Firms Loan Guarantee Scheme is a joint venture between the Department for Business, Enterprise and Regulatory Reform (BERR) and a number of participating lenders. Participating lenders administer the eligibility criteria and make all commercial decisions regarding borrowing.

Many small to medium sized businesses have good business plans that need additional funding. However, as a small business it may be difficult to obtain a conventional commercial loan due to lack of security.

The Small Firms Loan Guarantee (SFLG) avoids this problem by providing lenders with a government guarantee against default in certain circumstances.

Please visit the SFLG page on our main website for further details http://www.bestcommercialfinance.co.uk/smallfirmsloanguarantee.htm

Many people seem to approach commercial borrowing and commercial property finance under the false assumption that it works in a similar fashion to personal borrowing; this is simply not the case. Commercial lenders operate a significantly different set of lending criteria for commercial lending, to further confuse maters these criteria will often be different from lender to lender. If you are considering applying for commercial property finance, these short tips below can be used as a basis for preparing to submit your application.

• Contact a professional commercial finance broker, when applying for commercial property finance you will find their help, advice and expertise is invaluable; this is the optimum way to ensure that your application is successful.

• Prepare plenty of documentation in advance, you will be asked to provide a whole host of supporting documentation to bolster the credibility of your application for commercial property finance. You will definitely be required to produce a full set of corporate accounts which have been audited by an impartial entity. A business plan will also be required, this business plan must clearly prove the viability of the project which will be funded by the loan, and must demonstrate that your company is capable of meeting the loan repayments each month. Additionally forms of information may include disclosure of full information regarding company directors, shareholders and other officials and your memorandum and articles of association.

• Try to do a little homework before approaching lenders, discern which lenders have recently supplied funding for a similar project or for businesses that are in a similar situation to your own, these will be your prime lenders, you should make these your primary focus.

• Apply to as many lenders as possible, the more lenders you apply to, the better chance you have of obtaining your property development finance. The application process can differ significantly between lenders, and it should be noted that the monitoring and management of multiple applications can be a frustrating and time consuming task.

• Learn the language, lending establishments have a whole host of technical terms and concepts they use in day to day business, make sure you are aware of what these terms mean when used in conjunction with your application for property development finance.

By reviewing these simple guidelines above, we can see quite clearly that applying for commercial property finance is far from simple; it really is recommended that you secure the services of a professional commercial finance broker. By choosing a good broker to act on your behalf when dealing with lenders, you will be assured of your application being expedited in the shortest time possible, with the most chance of a positive outcome. Additionally a broker will be able to help and advise you upon the best way to produce the supporting documentation that will need to accompany your application for commercial property finance, as well as dealing with any problems that may crop up during the application.

The application process for a commercial mortgage has only a passing similarity with the application process for a personal residential mortgage. Commercial lenders operate a far more complicated set of selection criteria when weighing up the risk of a commercial mortgages that have been applied for. It is highly recommended that anyone who is considering seeking one of the many commercial mortgages on offer uses the services of a commercial mortgage broker. If you feel that you would prefer to handle the application yourself, then below you will find some tips which have been designed to prepare you for the complex and time consuming application process.

• Investigate the commercial mortgages offered by a whole range of lenders, you will need to apply to several lenders at the same time, in order to increase the possibility of your application have a successful outcome. Multiple applications made across multiple lenders will give you a much better chance of acquiring an offer of one of the commercial mortgages you have applied for.

• Gather the resources together for the production of all of the supporting documentation that will need to be sent along with your application. You will need to have a set of company accounts drawn up and audited by an impartial party. You will also need to prepare a detailed business plan which shows exactly how the company will benefit from the acquisition of the new property and which clearly demonstrates how funds will be made available to meet the repayments. A special consideration is the fact that when you apply for commercial mortgages from several lenders, the documentation may need to be presented in a slightly different format for each one, which means you may have to prepare several slightly different versions of the same documents based on the requirements of the lenders.

• Try to learn how the lenders apply their acceptance criteria, and produce your application to suit them. You will find that lenders will all have slightly different lending criteria, you will need to try and discern which lenders have criteria that most closely suit your own situation, these will be your prime lending candidates, and you should focus upon these lenders.

As mentioned at the beginning of this article, applications for commercial mortgages are best handles by a professional commercial mortgage broker. A broker has the specialist knowledge and experience required to deal with the lenders on their own level, they will also have access to a far greater range of commercial mortgages and will be able to assess your requirements and match them to the products which best suit your needs. Think of your commercial mortgage broker as a member of your own team who acts as your point of contact to the lending establishments, they will be able to streamline and simplify the entire application process involved in securing the best in commercial mortgages that will benefit your business the most.

Many people are under the false assumption that the application process for a commercial mortgage is similar to that of a personal or residential mortgage application; this is fundamentally an incorrect assumption. An application for a commercial mortgage is driven by a significantly different set of lending criteria, which need to be understood before an application is made. It is highly recommended that you hire a professional commercial mortgage broker to act on your behalf, a commercial mortgage broker has the knowledge and experience to make sure your application is handled efficiently, and with the highest possibility for success, some of the ways in which a commercial mortgage broker can assist you are detailed below.

• A commercial mortgage broker has access to a far wider range of lenders, and more commercial finance products than a company seeking its own commercial mortgage. Your broker will be able to assess your requirements and search all available products and find which are the best fit for your company’s specific borrowing needs.

• An application for a commercial mortgage will require a fair amount of supporting documentation to be supplied along with the application itself. A commercial mortgage broker will be able to assist you in creating the required documents such as audited accounts and a business plan, they will understand the format which the lenders require and help you produce these documents in a way that is most attractive to the lenders.

• A commercial mortgage broker has the capability of beginning the application process with a batch of lenders in a single package, something that a non-qualified individual cannot do. This makes the entire application process much simpler, as only one application form will need to be completed, and a single set of supporting documentation produced, even though your application will be presented to several lenders.

• Keeping up to speed with the current status of a mortgage application is time consuming, especially when you have applied to a range of lenders offering different products. A commercial mortgage broker is fully experienced in managing the application process, and is far more able to keep tabs on the state of affairs than a person who has little experience dealing with commercial lenders.

• Large lending establishments expect to be dealt with in a certain way; a commercial mortgage broker speaks their language and understands the best way to deal with them. By acting as your spokesman and first point of contact with the lenders, the broker can make sure that the application goes smoothly, and has a higher chance of a positive outcome.

It should be quite clear by now that the advantages to be found in having a commercial mortgage broker on your team, far outweigh the cost in professional fees. You will find that hiring a good commercial mortgage broker will enable your company to have the best chance of securing the commercial mortgage it is seeking in the quickest time.

In order to answer this question, let us first ask another. You will have your own sphere of excellence and area of expertise, you may be a leader in your particular field, in this situation would you recommend that a laymen attempt to do business in your marketplace? Of course you would not, industry expertise is one of the ways that an individual is gauged to have value, and this is doubly true in the heady industry of commercial finance. So it is perfectly logical to assume that the person most capable of applying for commercial loans is going to be a commercial mortgage broker.

Commercial loans are far more complicated to apply for than their personal finance counterparts, a commercial finance broker understands the industry that surrounds commercial loans, and is able to apply this expertise and knowledge on your behalf. Additionally, a broker will have direct access to a whole spectrum of lenders offering a much wider range of commercial loans than an individual would have access too; in effect they have their own channel into the lenders, one that only they can access. If you were to apply to a handful of commercial lenders seeking commercial loans, you would need to start a separate application with each lending establishment, not so for a broker, they can select a panel of lenders offering the type of commercial loans which suit your needs most closely and apply en-masse, one application, one set of supporting documentation, one point of contract.

Another significant benefit of using the services of a commercial finance broker when applying for any form of commercial loans, is the fact that you will have on your team an expert, full trained to deal with lenders, and fully capable of assisting you in the preparation of your applications for commercial loans, this will include advice on completing the application form and creating the supporting documentation. They will also act as your first point of contact into the lending houses, they speak the same language and understand how the lending industry works, their experience with commercial loans should be valued and exploited.

Commercial finance brokers are required to keep up to date with what is going on in the commercial loans industry and are required to maintain certain standards in their working practices. This is a hidden benefit for any company hiring their own broker to help with the application for commercial loans.