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The Different Types Of Property Finance and How To Use This Product? ​

Estimated Read Time: 4 Minutes

JESSICA LAMBERT , 26 January, 2023

If you’ve been exploring the funding options available for your business, you will likely have come across the term ‘property finance’. You  might want answers to how you can use property to grow your business or more in-depth information on the different types of property finance available.

Simply put, Property Finance is a type of secured business loan that uses residential or commercial property as collateral to secure the borrowed amount against. For businesses that are low on fixed assets, this type of loan is an extremely viable option as you can opt to use a charge against your residential property instead.

Nucleus Commercial Finance offer four different types of Property Finance which are outlined below:

Commercial Property Loan:

Commercial Property Finance enables you to borrow what you need to grow or start your business and this business loan is secured against residential or commercial property – and in some cases, a property portfolio.

You can borrow up to £20m, with terms lasting up to seven years. Our commercial property loan can be used by businesses to help alleviate numerous problems that may arise in order to continue vital operations.

If you need working capital to purchase new equipment or machinery, our Property Finance range is exactly what your business needs. Other common reasons why businesses access commercial property loans are to buy a new premises or fund a renovation, to pay off unexpected bills and to meet growth aspirations.

You can borrow exactly what you need, at competitive rates, with flexible terms.

Bridging Loan:

Unlike our commercial property loan, a bridging loan is a short-term funding solution that is designed to help businesses get from A to B. The standard bridging loan package lasts for around 12 months, but borrowers can have terms that reach two years. At the end of the term, the borrower pays back the agreed repayment and interest in one ‘bullet’ payment.

Examples of how a bridging loan is frequently used are:

  • To pay tax bills
  • To complete ongoing developments
  • Emergency cash for businesses in negative cash flow
  • To enable the quick completion of a property purchase
  • To repair bad credit

Our bridging loan can be used for almost anything, as long as it contributes to helping your business.

Term Loan:

Our term loan is exactly what it sounds like – a fixed term loan that can last for up to seven years. Once you receive the full amount, you then repay the loan plus interest in monthly instalments.

Term loans are a popular product as borrowers are able to gradually reduce the amount they owe, without needing to take any huge hit financially.

Interest-Only Loan:

The interest-only loan available from Nucleus can last for up to five years and businesses can borrow between £25k and £20m. With this secured business loan, you’ll be expected to pay a monthly interest amount, followed by a final, much larger payment to cover the loan amount.

Using your property to grow your business through accessing secured finance is one of the smartest things an entrepreneur can do. For SMEs and start-ups, access to the right funding options enables them to flourish to reach their true potential.

Property Finance Allow Start-Ups A Fighting Chance At Success

Start-ups stand to benefit largely from using Property Finance. Funding for brand new businesses has not always been readily available and the potential for start-ups to prosper is often stilted by a real lack of funding.

Most lenders have a strict lending criterion that they won’t be deterred from. A factor in this criteria is usually that businesses provide a record of all accounts, an accurate cash-flow forecast and a business model that is proven to work.

Naturally, most start-ups are not able to meet this criteria and this is why accessing funding for those initial years is usually very difficult. Secured business property finance allows start-ups to grow to meet their full potential. In order to access this funding option, start-ups need to provide a cash-flow forecast and a business plan.

Regardless of which type of property finance you choose to utilise, access to additional funding will no doubt make all the difference to the success of your growing business.

Whether you use the additional capital to meet your growth demands, to hire the man power needed to keep up with them or whether you use it to launch an innovative new product, the positive impact on your cash flow will certainly help you to achieve your goals.

For more SME advice and tips, read our related posts below. If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 7839 9451 or email [email protected].





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