Commercial Mortgage?

holly_hobby

Yep, the first thing is to inspect/have your accoutant inspect at least the last 3 yrs books (turnover, gross profit, net profit) - which your commercial lender will also want to do if you are continuing the same business (ie books are for a general store, you shall re-open as a general store). I would also want to know why they are selling up, if as you say, they have a niche clientel and little to no competition ?

Commercial finance = generally 75% max lending - so there may be issues there if they are not happy to secure at least the 25% against your home.

You could of course remortgage you home to release the equity to pch, or partly fund the pch of the business - but it will be based on income, and the purpose being for a business start up will make it a dead dodo (unless some creativity re the reason is employed).

The bank will want a thorough business plan - projections, why you feel you can make a success of it, how you plan to develop the business and increase profit etc, etc.

They will want to know if you have any experience at senior management/ running a business of the same or similar type, or indeed any operational transferrable business experience and skills at all.

If you have none .... well despite you being the only local store, this doesn't automatically mean it will be a roaring success, if you don't know have to assess and manage profit margins and product sourcing to sustain longerm profitability, marketing stratergies, staff management, etc, etc, in order to generate a decent net profit and keep afloat. Also depending upon why the current owner is selling (ie if the books reveal trend loss, and/or recent steady decling or consistent low profits), the bank will want a robust plan from you on how (when operating the same business type), you believe your business model will reverse the trend and make it a success, in providingconsistent and bouyant net profits, thereby ensuring your longevity in the business.

Don't forget if there is a flat above (self contained with separate access and entrance to shop floor), that could be rented out for extra income on an AST.

If you don't take a salary as you say because you will be incurring debt from CCs, as part of the start up, how will your daily living costs be met ? By the way, why can't you pch the fixtures and fittings as part of the pch from the current owner ? Which may avoid or reduce the extra shopfitting/racking reqd (even just until you're on your feet).

I know the above seems detailed and thorough ... but the lender approached will ask the same, similar and probably more !

So, depending upon the answers to the above (and your prev experience), my initial feelings on this is that I think you may struggle to find a home foro this ....

So, to get a general idea ASAP, you may want to make an appointment with the business development manager at your own bank, or local bank that offer commercial finance (such as Natwest, Barclays, etc). Establish from them in a general chat, what they ordinarilly look for in support of a new start up application of this type, and their UW process - including whether using your home as collateral security for the finance would be considered.

I say this, as this shouldn't cost you an initial fee, and will give you a prelimary and general idea, on whether you want/are able to proceed (given the requiremens). Which will then place in a position to decide if you want to engage a commercial brokers assistance to source the best deal. As, at it stands, even for a gen advice appointment, there will usually be an upfront fee, even if subsequently not placed or successful appliction achieved (this is due to the complexity and brokers time and knowledge spent in placing and support re processing of commercial finance apps) .

It won't be easy ... but I wish you well x

Anyway, some food for thought ... I hope !

Hope this helps

Holly x

maninthestreet

So what is current job - are you self-employed?