Make commercial property finance work for your business

Commercial property loans help UK businesses buy, build, or refinance premises such as offices, warehouses, factories, or retail units. They typically involve larger borrowing amounts and longer terms than standard business loans, with repayments secured against the property. If you are weighing up whether to purchase your own trading premises, invest for rental income, or fund a development, understanding how these loans are assessed and priced will save time and reduce risk.

Rates can be fixed or variable, and terms often run from 1 to 25 years, sometimes up to 30. Deposits of 20-40% are common, with lower loan-to-value ratios for newer businesses. Lenders look closely at your accounts, projected rental or trading income, and the property itself. In short, affordability and evidence matter.

Understanding APR is not just about percentages - it is about what you will pay in real money over time.

Key point: deposits typically sit between 20% and 40% of the purchase price.

Who benefits from this type of finance

Whether you are an established firm seeking stability through ownership, an investor targeting commercial rents, or a developer funding new builds and refurbishments, commercial property finance can match specific goals. Owner-occupiers often value control over their premises and insulation from rising rents. Investors look for predictable rental yields and long-term capital growth. Developers prioritise staged funding and exit routes.

You might be trading as a limited company, partnership, sole trader, or LLP. If your accounts show sustainable profits and strong cash flow, you can often access longer terms and sharper pricing. Newer businesses are not excluded, but may need larger deposits or additional security. If you are unsure which route fits your project, a broker like Kandoo can help benchmark lenders and structure applications for better results.

Finance routes you can consider

1. Owner-occupied commercial mortgage - buy premises for your own trading use.

2. Commercial investment mortgage - purchase to let to business tenants.

3. Commercial buy-to-let - similar to investment mortgages, focused on rental yield.

4. Bridging loan - short-term funding for fast purchases or refurbishments.

5. Development finance - staged drawdowns for construction or heavy refurbishment.

6. Secured business loan - raise capital against assets or property equity.

7. Refinance or capital raise - leverage existing property to fund growth.

Next step suggestion: shortlist two routes, then request lender-ready checklists.

Costs, impacts, returns and risks at a glance

Are you likely to be eligible

Lenders assess both the property and the business. Expect requests for at least two years of audited or well-prepared accounts, evidence of profitability, stable or improving cash flow, and a realistic forecast of rental or trading income. They will look at your credit history, sector experience, and whether directors can offer personal guarantees. The property’s value, condition, and location all influence appetite and pricing.

Loan-to-value ratios vary. For owner-occupied purchases, 70-75% LTV is typical, while new businesses may be capped lower, sometimes requiring up to a 50% deposit. Investment properties rely on projected rental cover, so lenders will stress test income against interest and costs. Bridging facilities are usually short term at around 65-75% LTV, with a clear plan to refinance or sell.

Kandoo, as a UK-based retail finance broker, helps package your application so it meets lender criteria, from business plans and cash flow forecasts to valuation readiness. Strong preparation can improve approval odds and secure better terms.

From first enquiry to completion

1. Define objective, property type, and target budget.

2. Gather accounts, bank statements, and forecasts.

3. Choose route and request broker comparisons.

4. Secure agreement in principle and instruct valuation.

5. Finalise deposit, legal checks, and due diligence.

6. Receive formal offer and review conditions.

7. Exchange contracts, complete, and draw funds.

8. Set up repayments and ongoing covenant reporting.

Advantages and trade-offs

What to check before you proceed

Run full acquisition and holding cost models, including stamp duty, valuation, legals, arrangement fees, insurance, and contingencies. Stress test affordability against higher interest rates and potential rental voids. For trading premises, ensure the location and specification are fit for your growth plans. For investment purchases, validate tenant demand and lease covenants. Bridging and development facilities demand clear, credible exit strategies with time buffers. Finally, align loan term and repayment profile to realistic cash generation, not best-case scenarios.

Sensible rule: plan for delays and cost overruns, then be pleasantly surprised if they do not arrive.

Alternative routes if a mortgage is not right

1. Asset finance - fund equipment while preserving cash for deposits.

2. Unsecured business loan - faster approvals, smaller amounts, shorter terms.

3. Sale and leaseback - release equity from existing premises.

4. Government-backed schemes - targeted support that may reduce pricing.

5. Joint venture or equity partner - share risk and funding requirements.

Frequently asked questions

• What deposit do I need for a commercial property?
  Most lenders ask for 20-40%. Established, profitable firms may achieve 70-75% LTV. Newer businesses may be asked for more equity.

• How long can I borrow for?
  Terms usually range from 1 to 25 years, sometimes up to 30. Bridging loans run 6-18 months and are designed as temporary finance before sale or refinance.

• Are rates fixed or variable?
  Both are available. Fixed rates give cost certainty, while variable rates can be cheaper initially but carry interest rate risk.

• What extra costs should I expect?
  Valuation, arrangement, legal fees, and stamp duty. In England and Northern Ireland, stamp duty is 0% to £150k, 2% from £150k to £250k, and 5% above that. Scotland and Wales have equivalent regimes.

• Can I get a loan as a new business?
  Yes, but expect lower LTVs, larger deposits, and a need for robust plans, projections, and possibly personal guarantees.

• What is needed for a successful application?
  Clean, up-to-date accounts, bank statements, business plans, income evidence, property details, and a clear repayment or exit strategy.

How Kandoo can help

Kandoo is a UK-based retail finance broker. We compare lenders across owner-occupied, investment, bridging, and development options, then help you present a lender-ready application. From clarifying deposit and LTV to arranging valuations and timelines, we streamline the process and target competitive terms. Speak to us to benchmark offers before you commit.

Important information

This guide provides general information only and is not advice. Eligibility and pricing depend on your circumstances, property, and market conditions. Always obtain independent legal and tax advice. Rates and criteria can change without notice.