The global financial crisis and credit crunch have made it an incredibly difficult few years for British businesses. Credit especially has especially been very difficult to obtain, banks have been reluctant to offer commercial mortgages to medium and small businesses. The drops in “loan to values” have been significant in the last few years, the negative media and political attention on bank lending has not had the desired affect either.
Despite this, it seems the signs of increased lending in 2011 are not another false dawn this time around. Economists and the Government expect the banks to finally turn on the tap in regards to commercial lending, with predictions of over an 8% surge in commercial lending for the next year.
So, if you have been putting off applying for a commercial mortgage, or you have found it tough to obtain the borrowing you need in the last few years, this could be the moment to look at it again.
More Commercial Mortgages because there is more cash available: The cat’s out the bag in regards to The Treasury and Britain’s top financial institutions discussing business loans and commercial mortgage funds of over £200 billion being made available in 2011. The Chancellor and government are keen on there being more cash and credit available for businesses and entrepreneurs to lead the way out of recession and as a counterweight to spending cuts.
It would seem that the Government is actually becoming stricter in regards to their expectations of all the main UK banks. Opposition MP’s have actually called for sanctions to be introduced for banks who fail to meet their commercial lending commitments, “It would be total nonsense unless there are penalties for failure”; it seems Lord Oakeshott, the Lib. Dem. Treasury spokesman, is certainly taking no prisoners.
While the current lending criteria and restriction particulars lay rather unclear, it certainly seems that an improvement in commercial mortgage lending will be inevitable in 2011, providing the already volatile relationship between the Banks and the Government remains relatively unscathed. Loosened restrictions and an increase in LTV’s make this year an extremely attractive one for any consumer looking to obtain commercial property finance.
As the economy improves, expand your business: The economic forecast is certainly one doused in positivity for 2011. By expanding your business in parallel to the growth of the economy, you can ensure your business continues to succeed as the market situation improves. Commercial Mortgages are a fantastic method of raising the capital required to buy what’s necessary for your business expansion, including vehicles and machinery in addition to extra space or bigger premises.
For example, buying, rather than leasing, a property has many advantages and you can obtain a commercial mortgage to help you purchase new premises. New offices, a new factory or a new warehouse may enable you to increase your staff levels, your turnover and your profits. The interest you pay on your commercial mortgage is normally tax deductible and you will own the property, making it a valuable asset to your business.
Historically low rates: Since March 2009, the Bank of England base rate has been at its record low level of half a per cent. Even if creeping inflation prompts an interest rate rise, experts predict that the base rate will stay low throughout 2011. Consequently, it has never been a better time to find great commercial mortgage rates.
While the base rate is in fact higher than it was pre-recession, the interest rate on commercial mortgages and business loans still benefit from low levels. Similarly, you may be able to benefit from a fixed rate, which allows you to take advantage of the historic low levels, even if the base rate increases any time soon. As a result, meeting your monthly repayment terms will be much easier, allowing you to effectively manage your business finances with ease.