Commercial Property Mortgages – Why Could You Be Turned Down?

Most business people at some point in their business lives find they need to apply for commercial property mortgages. Many obtain the finance with few or no problems. Some, however, find themselves rejected and don’t understand why.

If you are in this situation, you may want to look at some of the reasons why your application may have been rejected. Whatever the reason may prove to be, in many cases it is possible to find a way round it.

You may have been rejected simply because the lender you initially applied to does not deal with your type of business. In particular, some established banks are quite restricted in the kinds of business they lend to. Some, for instance, refuse commercial property mortgages for restaurant or pub businesses. Try shopping for your finance on the open market.
The lender who turned you down may have inspected your accounts and found something they were doubtful about. For instance they may have considered that your income was insufficient, or not stable enough. However, as long as you yourself are confident that you can afford the loan, you can ask your broker to find you a lender who will lend to you on a self-certification basis.
You may of course have experienced a recent cash-flow problem, or had difficulties in the past with making payments, resulting in adverse credit checks. Again, you may be able to deal with this through a self-certification commercial mortgage. If not, there are an increasing number of lenders who will accommodate businesses with credit problems, so ask your broker about this.
The lender may have found that the security offered was insufficient for the amount of the loan you were requesting. For instance, you may not have enough equity in your commercial premises. You need to find a lender who is willing to negotiate about the collateral they will accept. Most lenders will accept other business assets such as equipment or inventory. Failing this you may need to look at your private residential property. Always bear in mind what you stand to lose if you cannot meet the loan, and be sure in your own mind whether you are confident enough in your business to take this risk.

These are some of the most common reasons why your application for a commercial mortgage might have been turned down. Whatever the reason, the secret is, don’t give up too quickly. There are so many lenders of commercial property mortgages out there that you are almost certain to find a way round the problem. Think positively and ask your broker for advice.

Please note that the FSA do not regulate commercial loans or commercial mortgages

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