Raising business capital with a commercial mortgage «

Raising business capital with a commercial mortgage


If you’re a small business owner with an owner-occupier mortgage on your business premises and you need to raise funds for your company, remortgaging or refinancing your business premises can be a simple and convenient way of getting quick access to cash. Even if you don’t intend to use the proceeds to adapt or improve your property, there are many products that provide access to the equity in a business property for any business reason. Here are some of the advantages of raising business capital through your business premises:

• Many small business owners find it difficult to get a business loan, as they often don’t have the security required. With a commercial mortgage, the business premises are the security, so commercial mortgages aren’t always so difficult to come by.

• If you take out a business loan, it’s likely to have a shorter repayment term than a commercial mortgage. A commercial mortgage is just like a residential mortgage – it tends to be paid back over a long period of time. The term you manage to negotiate for your commercial mortgage will vary according to your company’s financial situation, but typical terms are normally between 15 and 25 years.
• There are tax advantages in raising capital in this way, as the proceeds you obtain from your refinancing or remortgaging may not be subject to tax and you may not have to pay tax on your interest payments.

There are two main methods of using the mortgage on your business premises to raise capital – recalculating your existing mortgage to include a borrowing amount, effectively extending your total loan amount, or tapping into the equity that’s available in your property. (Equity means the property value after subtracting all existing debts or mortgages associated with it.

 

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