The Client
There were two clients in this situation. One owns and runs a successful business. The other is the general manager of the pub and restaurant they were looking to buy. Both had a good income and no bad credit issues. One applicant owns a residential property jointly with her husband, and the other lives with her mother.
The Scenario
The clients wanted to purchase the leasehold of the business one of the applicants was already the general manager of, taking it into a new company and continuing to run it as before. The freehold was owned by someone else, so there would be no physical property to act as security for the commercial loan.
The Solution
As a whole-of-market commercial finance broker, we know that some lenders will fund a commercial loan to buy the leasehold of a business without tangible security. The lender initially asked the client who owned a residential property to put her house up as security. Because her husband was a joint owner and was not involved in the company purchase, this ultimately was not necessary.
The option offered instead was a Recovery Loan Scheme (RLS) loan backed by the government, removing the need for property security altogether.
Summary
It is possible to secure lending on complicated setups and situations that would be seen as undesirable to most lenders.
Key things to consider for leasehold business purchases:
- Some lenders will fund the purchase of a leasehold business
- Some lenders will offer commercial loans without tangible security
- Government-backed loan schemes can remove the need for property security altogether
Frequently Asked Questions
Can I get a commercial loan to buy a leasehold business with no property security?
Yes, some lenders will fund a leasehold business purchase without tangible security.
This is more common than many buyers expect, particularly where the applicants have a strong income and clean credit history.
Will a lender always ask for my house as security on a business loan?
Not always, and even where it is initially requested, it is not always required in the end.
If a joint owner of the property was not involved in the business purchase, some lenders will not require the property as security at all.
What is a Recovery Loan Scheme loan?
It is a government-backed lending scheme designed to help eligible UK businesses access finance.
Because part of the risk is guaranteed by the government, it can be a route to funding for cases that would otherwise struggle to find a lender.
Can two business partners apply together for a commercial loan?
Yes, joint applications are common on commercial lending of this kind.
Lenders will assess each applicant’s income and credit history individually as part of the wider application.
Commercial Finance Network is a whole-of-market FCA authorised broker working with property investors, developers, and businesses across the UK and internationally. We work across the full specialist commercial finance panel and will tell you which lenders will engage with your deal, what terms to expect, and how to structure the application before anything is submitted.
Commercial Finance Network is directly authorised and regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Buy-to-let and business-purpose lending secured against investment property is not regulated by the Financial Conduct Authority.
Call us on +44 1494 622 111 or email info@cfnuk.com to speak to a specialist directly.
Related Pages
- Commercial Finance – whole-of-market funding for businesses and property investors
- Working Capital Finance – flexible funding solutions to support business cash flow
- Bridging Loans – short-term secured funding for property and business purchases
- Mezzanine Finance – flexible funding that sits between senior debt and equity