Short Leasehold Business Finance

Finance For Leasehold Business

There are always businesses for sale that only have a short lease (where the lease is less than 25 years) and demand to buy is always high. However most prospective purchasers soon learn that finding the finance for a leasehold business needs the services of a specialist commercial finance broker.

Why Your Bank Won't Help!

The number one reason that most banks or standard commercial mortgage lenders can't help to fund a short leasehold business purchase is that they don't meet one of the main lending criteria i.e. that there should be a minimum of 35-55 years left on the lease after the mortgage has been repaid. Banks may help if the applicant has experience in the target business sector as long as other "freehold" security is available.

What you need to know

The main thing to remember when applying for short leasehold finance is that valuation costs to support any application tend to be much higher than for a standard bricks and mortar valuation. This is because a much more detailed business valuation will be required by any lender which unfortunately reflects in the price. Therefore you should set aside between £1k & £3k to cover this potential cost. The actual cost will depend on the type & size of business being valued. We will be able to give you a cost when you contact us.

It is therefore essential that you do your own research into the likely value of the business and get independent opinions where possible without relying solely on the vendors "sale price". This will help avoid the dis-appointment of laying out cash and finding that a valuer disagrees to such an extent that no funding can be offered thereby losing the cash paid for the valuation.

Don't forget to factor in the associated annual rentals when making your decision to buy a leasehold business, in particular the rents tend to be quarterly and up-front.

Where We Can Help

We cover all small business short leasehold sectors from catering to retail, from licenced trade through to care homes, gym's and nurseries.

How We Can Help!

As specialist commercial loan brokers we know how difficult financing in this sector is and have built relationships with a number of specialist lenders who are willing and able to help. Funds are available for prime and sub-prime cases with loans offered in many cases at bank level rates of interest, starting from bank base rate plus 3%. However many brokers only offer one option, a very high cost option which we believe should only be used as a very last resort!

If you have found your dream public house or local supermarket why not contact the leashold lending finance specialists today!