The ability to invest or not invest in your property portfolio may perhaps be essential to future growth, development and the overall success of your business. A property portfolio business investment loan, maybe available to customers seeking to borrow amounts in excess of £25,000. Loan of up to £250,000 are available A business investment loan is a good tool to fund expansion and offers investors a simple and flexible way to fund planned growth in their core business. The investment is typically assured against other property investments or capital but options for unsecured funds may also be possible.
A business investment loan works by providing loans suitable for individuals or companies owning freeholds or leaseholds on existing properties from which they either invest or operate (i.e. owner-occupied commercial property). An example of where this may benefit a property portfolio is that it can enable individuals or businesses to purchase fixed assets either for business purposes. Other examples maybe where the portfolio purchases business premises on owner-occupied basis, or assists to acquire businesses that complement the existing activities of the company. Second home loans also operate in a similar way, where they support investment in second properties by using collateral locked up within existing properties.
The benefits of a business investment loan are numerous and include; Flexibility – where investors have ability to use free equity in their property portfolio to invest in their business. Choices – where a range of flexible repayment options may be available to support such investments. Adaptability – where loan repayments are adapted to suit the cash flow needs of the property portfolio. Manageability – where investments are easier to manage and planning for budgets and future expansion are controlled with options for fixed interest rates to protect against interest rate hikes. Other benefits include interest only options from 1 – 25 years.
Important elements to consider when applying for business investment loans.
1) Understand the variable and fixed rates available to your investment – it maybe in your interests to search around or negotiate the best deal which maybe fixed, flexible or a combination of the two.
2) Determine the length of your loan. The maximum period is typically 25 years. In specific cases in may be in your interests to pay off the balance early e.g. to use profits. If this is the case then carefully consider the risks of redemption penalties.
3) Understand the types of repayment and select the most appropriate to your investment. Two types of repayment typically appear a) Interest only b) Capital and interest. In the latter the loan is cleared off whereas with the former the original loan value or capital value is still outstanding at the end of the finance.
4) Consider alternative sources of finance e.g. Secured loans, Second home loans. Consider the interest rates, flexibility, simplicity and control of these investments against business investment loans.
5) Consider the fees for setting up a business loan versus other forms of secured loans. Business loans tend to be more expensive and also require larger collateral than home loans. Always measure and compare the different sources of finance and consider all elements in the costing of the loan and not just the monthly repayments.
In summary, property portfolio business investment loans are available through many banks and financial institutions. The bigger picture of loan costs should be considered in the equation to understand not only monthly repayments but also short term and long term costs overall. Carefully compare other sources of finance before negotiating and agreeing loan terms.