Property Finance: What are the Different Types?

London 2020

In business, smart financial management is key to success. There are many areas of finance that this includes, including funding. One of the most common forms of funding that a business can use is property finance, which is a secured loan that is backed by a commercial (or residential property). Getting approved for funding can be challenging for many businesses, but property finance can make it easier for companies to secure funding that they can then use to grow and improve the business.

Property Finance Options

As you might imagine, there are a number of options when it comes to property finance. It is important to be aware of each so that you can find the best option for your business and the goals that you have. The main types to familiarize yourself with include:

Commercial property finance: The ability to borrow what you need for starting, growth or managing a difficult period secured against a commercial property. For startups, you can get commercial property finance with a business plan and cash flow forecasts.

Bridging loan: A bridging loan is similar to the above but more of a short-term option with most loan durations lasting just 1 year. As the name suggests, this is often used to bridge a gap so that you can manage during a period of transition. The total amount and interest will be made in one payment at the end.

Term loan: A term loan can last for a number of years and has a fixed term. Repayments will be a fixed amount that is paid monthly while the amount will be received in one lump sum. This makes it a good option for startups or those that have a major expense to cover.

Interest-only: An interest-only loan involves only paying back the monthly interest on the loan before settling with one large, final payment to cover the capital (and final month’s interest). This makes it another good option for a startup while it finds its feet or a business going through a difficult stretch and looking to change its fortunes.

Property finance can be a great way for a business to get access to funding. Whether you are a startup, going through a difficult period or have growth plans, property finance can be an easy way to get approved for funding. You should speak to a specialist to see if this is a good option for your business and to determine what the right type of property finance is for you.

Hopefully, this article will help you to gain a better understanding of property finance. There are many times when business might require funding and property finance can be the best option in many cases.

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