At Johnson Reed, we often see a crisis in confidence. But this isn’t just from banks and mainstream lenders. Sometimes, small businesses don’t take the plunge for a new premises, despite the growth it can offer.
By purchasing your own premises, you can potentially give your business the security it needs and, in the process, be better off. A commercial mortgage can fund your acquisition.
With some fantastic deals in the market, could now be the time to purchase your own premises? Or, if you already own business premises, do you know if you have the best available rates?
We work closely with 2XL Commercial Finance, a commercial mortgage broker that specialises in funding for both owner-occupiers and commercial investment. Here’s how they can help realise your business aims.
Is a commercial mortgage for you?
Johnson Reed’s loans average at around £40,000-£50,000 for our clients. This is a significant sum when leasing equipment, buying capital or plugging holes in your cash flow.
However, when purchasing a business premises, commercial mortgages are often much larger, longer term and attract lower rates than your traditional asset finance purchase – all in return for gifting security over your property assets.
Of course, you might go down the seemingly safer but more limiting route of renting your premises and staying in it for many years. You may feel as if traditional lenders wouldn’t support an acquisition. But you might end up with static profits and unrealised potential.
A commercial mortgage could really help your growth strategy at the perfect time.
And that’s why 2XL Commercial Finance is so useful…
How commercial mortgage brokers fight your corner
“You wouldn’t ask a mechanic to do a heart operation, so why take advice from people who don’t operate in the financial arena?” asks Darren Willoughby, Managing Director at 2XL Commercial Finance.
For Darren, too many SMEs are restrained by their reliance on banks, traditional lenders and advice from well-meaning friends and family. “A fair portion of people don’t know how to get a commercial mortgage or what’s available,” he says. “If my clients are looking to buy new premises, then it’s often the best route – with funding available up to 85% Loan-to-Value and terms of anything up to 25 years with additional security.”
Darren has been championing small, growing businesses for well over a decade, ever since the credit crunch hit in 2007. He set up 2XL Commercial Finance because he saw that there were so many products available in the marketplace, and that clients needed help in ensuring they got the best deal for their individual circumstances. Like Johnson Reed, he knows that a ‘whole-of-market’ approach means clients get a deal tailored to them, with more choice too.
As Darren explains, buying instead of renting makes a lot of financial sense. “If you currently rent premises at, say, £25,000 per annum and it’s available to purchase at £300,000, you could lay down a 20% deposit and borrow £240,000 over 25 years. That means you’ll pay approximately £1,200 a month and save around £10,000 per annum. By the end of the term, you own the building outright and save the equivalent of £240,000.”
The next step in your growth strategy
This ties into Johnson Reed’s short-term lending service. If you borrow several thousand pounds for an equipment lease, the added freedom will likely bring in more profit. As you pay the debt back, your credit score builds. Over time, you’re in a stronger position to take out a commercial mortgage, which has slightly stricter conditions than (for instance) a five-year lease request.
And, like us, 2XL Commercial Finance are down to earth. There are no reams of paperwork. No endless phone calls. “We act from the point of enquiry to the release of funds,” says Darren, “negotiating with the lender and overviewing documentation. A quick ‘no’ is better than a drawn-out ‘maybe’.”
That’s why we’re an affiliated partner. To get your business where you want it to be, speak to us. We can arrange a short-term cash injection or refer you to Darren and his team.