Specialist finance for leasehold retail businesses

Businesses operating from premises where the leaseholder pays rent to a landlord (the freeholder) falls into a category known as a "short term leasehold business". Finding finance for a retail business where the leasehold is typically short, in lending terms, is very difficult.

Few lenders will consider a loan or refinance in a sector where a lease is usually for 20 years or less. This is also an area with very few lenders prepared to risk funds to purchase a business where values are determined by turnover and profits alone along with the risk of annual rents increasing significantly after a 3 or 5 year review.

With a maximum loan period of 5 years, applicants should note the combination of capital and interest repayments mean that monthly mortgage payments will be high. Please note that valuations for this kind of business are expensive, however these upfront expenses can be added to the loan on successful completion.

We can offer the following finance options:-

Retail Business Leasehold purchase or refinance without security - Option 1

We now have a new "low cost" "self certified" option that may be suitable for some clients, with interest rates starting from base rate plus 3%. Here are the loan criteria:-

• This option is not currently available
• Minimum loan £50k
• Maximum loan £125k
• Loan to Valuation 65%
• 100% available with additional security.
• Maximum Term - the unexpired term of the lease must be 3 years at the end of the mortgage.

Retail Business Leasehold purchase or refinance without security - Option 2

To secure the following, more expensive, loan options it is essential that the business can support any loan request, it is simply the principle condition to secure funding. As part of the loan application a specialist business valuation will be required to enable an offer to be made. The valuer will require a copy of the business accounts and your business plan.

• Minimum loan £50k
• Maximum loan £100k
• Minimum business purchase price £100k

The maximum loan that can be considered is the lower of 50% of the business purchase price or business valuation. The maximum loan term is the lesser of half the un-expired lease term or 5 years.

Retail Business Leasehold purchase with collateral - Option 3

• Minimum loan £50k
• Maximum loan £500k

With additional security a loan can be considered up to the lower of 100% of the business purchase price or valuation. The maximum term for the loan will be 5 years. Sufficient equity should be available in your main residence or other freehold property (for example a buy-to-let) to allow a second charge to be registered to support your leasehold loan. Suitable freehold security will also allow a low-start payment option, if required, whereby repayments can be reduced by 50% for the first 2 years.

Leasehold business sectors

Loans are available in England & Wales covering almost every type of leasehold business. Examples of sectors covered include:-

Catering Businesses

The catering sector includes fast food and take-away outlets such as burger bars, cafes, chinese, fish & chip shops, kebab shops, indian, italian and thai.

Licenced Retail Trade

The licenced sector covers public houses, inns, taverns, wine bars and restaurants.

Retail Shops

These outlets are typically barbers, DIY shops, dry cleaners, general stores, hair dressers, newsagents, off licences and post offices.

Other Retail

This miscellaneous sector covers children's nurseries, care or nursing homes, fitness clubs, garages, guest houses, hotels and sporting goods shops.