Business
loan
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The
Financial Services Authority do not regulate some aspects
of business finance or a commercial mortgage.
Commercial
lending is a financial loan for business purposes. Traditionally
a bank may generally loan up to 70% LTV
(loan
to value) so the business would put down 30% as a deposit.
The bank will usually want to see a lot of business records
including trading accounts, profit and loss, balance sheet,
monies outstanding, monies owed, trading projections, bank
statements and a business plan. The bank may request that
the directors of a company if it where a limited company put
up their own houses as security to the debt. A minimum track
record of trading normally three years will have to be demonstrated.
Business loans may be regarded as higher risk than residential
lending this is due to the fact that a very high percentages
of new business will not be trading after five years and even
after five years many businesses cease trading. Running a
business is high risk and very vulnerable to outside influences
for example European regulation, red tape, competition, changing
markets and channels of distribution.
A good example of this is over the last few years trading
over the internet has dramatically increased and therefore
has seriously adversely affected shops' trading figures. Because
business is risky great care and business research should
be conducted before committing to commercial finance to ensure
success or reduce the risk of failure. Another example is
how the large supermarkets have severely affected local shops'
trade, with massive buying power and household branding.
More
recently commercial lending has shown to be a developing industry
with the arrival of new lenders whom have a border view on
lending to business. For example they allow self cert, 85%
LTV, no trading figures or track record and adverse credit.
This though comes with a price of higher interest rates and
longer tie in periods.
The
following APR relates to the above products only.
THE OVERALL COST FOR COMPARISON IS :-
8.9%
APR
The actual rate available will depend upon your circumstances
ask for a personalised illustration. |
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