What Is Property Finance?

Property Finance Hub

What Is Property Finance?

Estimated Read Time: 6 Minutes

You may have come across the term ‘Property Finance’ when exploring your business funding options and perhaps you’re still a little unsure about what this lending product entails?  

There are numerous variants that are used to describe Property Finance products, but some of the most common are commercial finance, bridging finance, term loans and interest only loans.

Property Finance is actually one of the most straight-forward funding products out there and simply put, it is a secured business loan.

When people access Property Finance, they secure the loan against a residential or commercial property – and in some cases, a property portfolio is also used as collateral.

This kind of secured business loan is perfect for businesses that have the potential to grow but due to a lack of capital, have been unable to meet their growth targets previously.

 With the Nucleus Property Finance products, your business can achieve its growth goals, with the ability to borrow between £25,000 and £20m.

 Finding the right funding option for your growing business may be the difference between your incredible business idea turning into something tangible – or it failing miserably, despite how innovative it is.

 As a business owner, it is vital that you educate yourself on what funding options are available to you, as a lack of awareness is one of the main reasons that SMEs fail when they need access to funding the most.

 According to a recent survey, the common reasons small businesses fail are because of the following:

  • Poor cash flow management
  • Lack of a well-developed business plan, including insufficient research on the business before starting it
  • Not seeking help when needed
  • Starting out with too little money

Utilising a viable funding option will address all four of the above-mentioned problems. In order to access our secured business loan products, the team at Nucleus Commercial Finance like to understand the businesses we help in greater detail compared to many other lenders.

Our range of products allow us to find a financial solution to suit the needs of most businesses. Due to our human approach and our emphasis on getting to know your business, we ensure that you get the best funding to suit your individual requirements. That might be in the form of a tailored solution that includes a combination of our products.

For businesses that need access to funding to grow but are low on fixed assets, our Property Finance products come highly recommended. Whilst Property Finance is a secured business loan, it doesn’t mean that businesses with low fixed assets are unable to use this product, as you can use a charge against your residential property instead.

Property Finance is also a fantastic option if you feel that your business does not meet the standard lending criteria. We attempt to give all businesses a chance and have a much less black and white approach when compared to the banks, so if your business has historically experienced adverse credit, we still want to hear from you.

As this type of funding is a secured business loan, we can provide competitive rates with better terms. For borrowers on a tight budget, secured business loans are usually the more popular choice.

We offer extremely flexible terms with our Property Finance products, meaning your business can have a financial boost with terms ranging from 3 months to 8 years in length.

 

Our Property Finance Products

We have four types of products that fall under Property Finance, which we will explain in greater detail below. If you are still unsure about which is most suitable for your business, get in touch with our team to organise a phone consultation.

Commercial Property Finance:

Commercial Property Finance allows your business to borrow what it needs by securing your loan against either a residential property, a commercial property or a property portfolio. Businesses can borrow between £25k and £20m, with terms lasting up to seven years.

Commercial Property Finance is also a feasible option for start-ups. For businesses that require start-up capital, our commercial Property Finance product can be accessed providing you present us with a business plan and cash flow forecasts

To be eligible for this funding option, your business needs to be registered in England and Wales and you will need to own a residential or commercial property. Additionally, we ask for a full set of business accounts and your three most recent bank statements.

 

Bridging Loan:

bridging loan is a secured, short-term business loan that uses residential or commercial property as collateral.

Similar to commercial Property Finance, businesses can borrow up to £20m and the standard bridging loan package usually lasts 12 months. As the name suggests, this type of finance is designed to ‘bridge’ a gap and is therefore not considered a long-term funding option. Nucleus Commercial Finance offer this kind of Property Finance with terms that last up to two years.

This popular funding option is usually used when businesses have a clearly defined plan for financing. A good example of this is if you’re in the process of having your mortgage application finalised but don’t have the time to wait and need to make a property purchase immediately.

Essentially, a bridging loan should be seen as short-term business funding that enables you to get from A to B. It’s not a long-term solution, so if you are looking for a loan with a lengthier duration, it’s recommended that you explore a more permanent finance solution.

The repayment terms for this product are simple – the agreed repayment and interest are settled in one ‘bullet’ payment at the end of the term.

 

Term Loan:

Our Property Finance term loan is a fixed term loan and it can last for up to seven years. With this product, you will receive your loan amount in full once property checks and an evaluation has been made.

This type of repayment scheme is hugely different to a bridging loan in that term loans are paid back in monthly repayments to gradually reduce the outstanding balance.

For businesses that need a large lump sum of money to purchase a new premises, handle a management buy-out or pay off unexpected bills, our Property Finance term loan is the perfect solution.

 

Interest-Only Loans:

With the Nucleus Property Finance interest-only loan, the duration of the term can last for up to five years and businesses can borrow between £25k and £20m.

This product is great for start-ups as it requires the borrower to pay minimal monthly repayments, meaning you can use the sum of money we provide to turn your situation around to ensure your business is thriving.Unlike our term loan product where businesses pay back the amount on a monthly basis to eventually reduce the amount of money borrowed, with our interest-only loan, we collect monthly interest payments and then a final, large sum covering the capital and one month’s interest.

 

What Next?

If you feel that this funding option could be the perfect fit for you then check your eligibility now to get the process started. Your online application only takes a few minutes and once you have made your enquiry, our friendly, experienced team will then organise a phone consultation to check whether your business is eligible.

Once you send us your documents, we then send you an offer as quickly as possible and complete a valuation on the property you are wanting to use as collateral.

When the paperwork and legalities have all been dealt with, you will receive your funding and have the opportunity to grow your business with the much-needed capital you’ve been trying to access.

Typically, the process from application to receiving your money takes between two to three weeks, but due to the nature of this product and the property valuations required to access it, this time can vary.

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 contact@nucleus-cf.co.uk.