Whether you’re new to the world of small business or you have one that’s pretty established already, you’ll know that finances are one of the biggest problems that most business owners face. Shockingly, 82% of failed businesses say that finances are at least partly responsible for their failure. For those who are new to the business world, this statistic can be disheartening.
However, there are things you can do to improve the finances of your small business – and this includes taking out a commercial mortgage. Read on to find out how this can help make your business more successful.
What is a Commercial Mortgage?
In layman’s terms, it’s a loan to purchase a property for commercial purposes, rather than residential. Commercial mortgages do work similarly to residential mortgages when it comes to the basics; you’ll be required to pay a deposit and any lender fees with both, and both mortgages are also paid over a fixed term (usually 25 years).
However, there are distinct differences. Due to the inherent risk of lending to a business (especially start-ups), you’re subject to varying interest rates. You might also be required to pay a larger deposit than on a residential mortgage – some lenders will require up to 40%. These factors might make you hesitant to get one, but there are also many benefits to a commercial mortgage.
How Can It Help My Business?
A commercial mortgage has several financial benefits, which could be the difference between the success and failure of your small business. Firstly, when you own your commercial space you can do whatever you want with it, including renting out any space you don’t use – this provides a valuable opportunity for extra income.
Additionally, if you work to improve the space, you’re increasing its value. Doing this while renting just gives the landlord more money but, if you own the space yourself, you’re adding to the assets of your business. This means that taking out a commercial mortgage is actually a long-term investment; a little money up front can mean a lot of money down the line, because most property will only increase in value.
Another advantage is that, with a commercial mortgage, you’ll be paying back more or less the same amount every month. On the other hand, while renting, you’re subject to unexpected rent increases which can make your monthly budget useless. Therefore, having a commercial mortgage gives you more financial stability.
This is just a brief insight, and there are several more benefits of getting a commercial mortgage for your business.
How to Get the Best Deal
With a small business/start-up, lenders will often be reluctant to give you a commercial mortgage. By going through an online mortgage broker such as Trussle, you’ll be more likely not only to have a lender agree to loan you money, but you’ll get the best deal available. This is because mortgage brokers liaise with lenders directly, and often they’ll have access to deals that are not available to the general public. You can use their services such as their calculator and mortgage comparison to find out today whether a commercial mortgage is the right choice for you.
Overall, a commercial mortgage is often a worthy investment, but it’s something that you should take time to consider, and figure out whether it’s the best option for your small business.