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Commercial Finance Independent UK Broker

Commercial Finance – Business Interruption Loans and COVID

How COVID-19 Has Impacted Commercial Finance

The COVID-19 pandemic has left a lasting impact on many aspects of life, from restrictions on social lives, to businesses going into administration. Even though the UK economy is now experiencing a period of positive growth, mainly due to the pace of the vaccination programme, the financial impact of the pandemic is still very visible.

Should you be looking for some free and friendly advice, contact our team on 03303 112 646 or send a message online to begin an email conversation should you prefer.

Shortly after the first lockdown restrictions came into place, lenders were quick to tighten their lending criteria, to try and protect themselves from the expected risk of higher unemployment levels and people struggling to pay off mortgages and loans.

Commercial finance was affected in a similar way, with so many businesses being forced to close during lockdown, the commercial finance landscape lurched into unknown territory.

Many businesses were provided with financial support in the form of furloughing, business interruption loans and bounce back loans but others were unable to apply for these. Some lenders offered holiday payments for commercial finance, so there were numerous financial support options in place to try and help struggling businesses survive the pandemic.

Commercial Mortgages UK Adverse Credit and BTL

As an independent UK Commercial Mortgage Broker we carefully examine all the Buy-to-Let mortgage offers from leading whole of market lenders across the UK. You will benefit from low interest rates, lenient eligibility criteria and a simplified procedure. You also have the choice of Second Charge Mortgages, Adverse Credit Mortgages for individuals with crediting challenges, to straightforward Residential Mortgages for your own home.

With the reassurance of attractive Mortgage Protection Insurancee options, we also offer specialist mortgage broker services such as self-employed Contractor Mortgages, Expat Mortgages, home loans and Sharia Mortgages, to commercial Serviced Accommodation Finance from holiday homes to Property Investors, Developers and existing Homeowners.

Business Loan Applications – UK’s Changing Priorities

The priority for the government was to assist existing businesses, rather than helping new businesses to launch, which was highlighted by the financial support options that were made available. Startup loans were still available from some lenders but it was now harder for many would-be entrepreneurs to access loans.

In the UK, many people use startup business loans to buy the equipment and pay for other essentials when they start up a business. With the economic downturn, many lenders have withdrawn products from the market and tighter lending criteria was applied.

However, the Bank of England cut interest rates down to 0.1% which meant that some of the new business loan interest rates have been more attractive for startup business owners, but there is a more comprehensive set of lending criteria to enable lenders to manage risk in the unstable climate.

COVID Government finance support schemes for businesses

To assist existing businesses who had been adversely affected by coronavirus, the government introduced the following schemes to support cashflow during this challenging period:

Interest-Free Business and Commercial Loans

Coronavirus Business Interruption Loan Scheme (CBILS)

SME businesses have been able to access business interruption loans for lost revenue and cashflow disruptions. The CBILS was also made available to businesses whose growth requirement could not be supported under standard bank lending criteria. Under the scheme, businesses who had been adversely affected by the pandemic could apply for loans of up to £5million.

The first 12 months of the loan is interest-free and the interest rates after a year for the CBILS scheme were set by the lenders. Some lenders provided the loans with an interest rate as low as 1.4%, while at the higher end of the scale, some lenders were offering the loans with a 8.9% interest rate. Terms were available for up to 10 years.

To encourage more lending, the government also guaranteed loan repayments, with the borrower being fully liable for the debt.

Lenders were able to provide the following finance under the CBILS scheme:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Bounce Back Loan Scheme (BBLS) SME and Sole Trader Businesses

The Bounce Back Loan was aimed to support smaller businesses and sole traders, to provide them quick access to financial support. The scheme allowed businesses to borrow between £2,000 and up to 25% of their turnover (to a maximum of £50,000). For the first 12 months, there is no interest to pay and following that first year a rate of 2.5% would be applied.

The maximum loan length for the BBLS was six years and this scheme also came with a guarantee to the lender from the government for the repayment, with the borrower remaining liable for the debt.

Pay As You Grow (PAYG) Business Support

For businesses who took out the BBLS, the option for PAYG was later introduced to provide further support, allowing:

  • An extension of the loan term from six years up to 10 years, remaining at 2.5% interest rate.
  • Reduction of monthly payments by paying interest-only for six months. This could be requested up to three times throughout the term of the loan.
  • A repayment holiday of up to six months, which was only available once during the term.

Other financial support provided to businesses included:

Job Retention Scheme – Paid in the form of grants to pay 80% of the salaries of furloughed employees.

New Restart Grants – A one-off cash grant of up to £18,000 for businesses re-opening from April 2021, including pubs, hotels, restaurants, gyms, salons and clubs.

Business Rates Holidays – Business rates were cancelled for all retail, leisure and hospitality businesses for the tax year 2020-21 and up to June 2021, with a discounted rate for the remainder of the tax year.

Recovery Loan Scheme – This has replaced the BBLS and allows businesses to apply for between £25,000 and £10m. The government has given lenders an 80% guarantee for these loan repayments.

There have also been other schemes for different types of businesses, some made available through local authorities.

Commercial Finance Landscape Has Changed – Conclusion

COVID-19 has completely changed the landscape for commercial finance, particularly as the government has been compelled to step in to help save businesses from closure or building up unmanageable debts.

Lenders have been able to provide loans under the schemes with the security of knowing that the repayments are guaranteed by the government, which has helped them to continue providing finance to businesses when the risk to them is extremely high.

The success of the UK vaccination programme has already had a significant impact on economic recovery in the UK and the combination of this, along with the support that the government has provided will certainly have saved many businesses which otherwise would have gone into administration.

Experts are predicting that over the next few years should hopefully see a shift back towards the type of commercial finance products that were available pre-COVID, albeit with stricter lending criteria until we see a full economic recovery.

Commercial Finance Network is a specialist Commercial Finance Broker offering all types of commercial finance to SMEs along with individual investors. Get in touch today via either our Contact Form or call us on 03303 112 646.

Commercial Business Finance – The Rise of AI In The Banking and Lending Circles

June, 2017 archives: “Artificial intelligence can help people make faster, better, and cheaper decisions. But you have to be willing to collaborate with the machine, and not just treat it as either a servant or an overlord,” says Anand Rao, PwC Innovation Lead, Analytics.

The quote neatly sums up our relationship with AI technology. Although we appreciate its potential, we feel edgy about its power and possibilities. However, despite this, it’s pervading our lives as consumers, whether we like it or not. Every time we receive a marketing email or product recommendation, we can be sure the algorithms have been at work and we are far from the random target.

Despite its image of being cautious and conservative, the banking industry as a whole appears to have had few qualms about adopting the technology – and it seems that, as consumers, we are happy with this. A mammoth survey of around 33,000 consumers by Accenture found that more than 70 percent of us would be willing to receive computer-generated banking advice. “Automated servicing can be the sole source of data from some customers, even when making complex decisions around products,” says the report.

One of the main uses of AI so far has been in customer service. Chatbots are becoming the de facto alternative to banking apps. This use AI to simulate conversion through written or spoken text. Just as Amazon has humanised its digital assistant by calling it Alexa, so has the Nordic banking group Swedbank created ‘Nina’. This chatbot is clearly popular; within three months of being deployed, Nina was averaging around 30,000 conversations per month.

However, this is the sharp end of AI – the human/machine interface mainly used in the consumer-facing world of retail banks. But how does – or will – AI play out in a commercial finance environment?

The business sector is understandably more cautious, prudent perhaps, about adopting new technologies until they have matured. But as millennials take up more senior roles in the commercial banking world, they will be increasingly pushing for the rich functionality they know as consumers to also be integrated into their working environment.

Today, we are seeing signs that adoption rates of AI-based technology are set to take off in business banking too. More and more banks are borrowing retail banking experience to build out their commercial and business strategies. But while the focus of its use in the retail banking world has mainly been for customer service and sales applications, in commercial banking, use cases (initially at least) are likely to be more around streamlining operational processes.

In a sense, AI as it stands today, in this environment is all about automation, about making processes faster and more efficient. And there are a raft of applications here where automation is having a hugely positive impact.

Take the introduction of digital expenses platforms and integrated payments tools, both of which have the potential to significantly improve a business’s approach to how it manages cash flow. By having an immediate oversight, through live reporting of all spending from business cards and invoice payments, as well as balances and credit limits across departments and individuals, businesses can foresee potential problems more quickly and react accordingly. All these services become even more powerful when combined with technologies like machine learning, data analytics and task automation.

We are already seeing growing instances of AI and automation being used to streamline payment processes in banks. Cards can be cancelled or at least suspended quickly and easily and without the need to contact the issuing bank, while invoices can also be automated, to streamline business payments. This means businesses can effectively keep hold of money longer and at the same time pay creditors more quickly. Moving beyond straightforward invoice processing, intelligent payment systems can be deployed to maximise this use of company credit lines automatically.

Looking ahead, we see a string of applications for AI in the payments management field around analysing data with the end objective of spotting anomalies in it. With the short and frequent batches of payments data used within most enterprises today, it is unlikely that even the best-trained administrator would be able to spot transactions that were out of the normal pattern. The latest AI technology could be used here to tease out anomalies and pinpoint unusual patterns or trends in spending that could then be investigated and addressed.

While this area remains in its infancy within the banking and financial services sector, with technology advancing, financial services organisations and the enterprise customers they deal with will in the future will be well placed to make active use of AI that will help clients track not just what they have been spending historically but also to predict what they are likely to spend in the future. AI will ultimately enable businesses to move from reactive historical reporting to proactive anticipation of likely future trends.

Source: Russell Bennett, chief technology officer, Fraedom

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Crowdfunding 101: How UK Businesses Can Use Crowdfunding As A Viable Alternative Finance Option

Over the last decade, many new types of alternative finance have emerged in the UK market. Some of these have built upon the traditional methods of funding a business, while others have quite successfully disrupted the market to a certain degree.

Crowdfunding belongs to the latter category.

Getting a group of individual investors to pitch in together to fund a business isn’t something new, but crowdfunding, with the help of available technology, has made it possible for thousands of people to back a product, a service or even just an idea in their personal capacity.

What Is Crowdfunding?

Crowdfunding is exactly what it says it is.

Up and coming businesses (especially the ones that find it tough to raise finance via traditional channels) share their ideas, business plans, product prototypes and everything else that is relevant on a crowdfunding platform and individual investors decide if or how much they want to contribute.

The investors, in return, can get equity in the business, dividend from the revenue or royalty from each sale made, depending on the terms of contract.

It sounds quite simple, because it is. The only decisive factor here is the merit of the idea being pitched.

The UK Crowdfunding Market

Crowdfunding, as we noted earlier, is exciting for both businesses and investors. However, these are still early years, and it would be unfair to compare crowdfunding with other finance/investment avenues such as business loans or commercial finance.

It is estimated that from its inception in 2011 to 2018, crowdfunding has contributed over £600mn to UK businesses.

Is Crowdfunding The Right Choice For Your Business?

Not all businesses are built the same. Crowdfunding can, however, be extremely helpful in getting your business off the ground. Many young businesses and start-ups use crowdfunding just to get through the proof of concept phase (building a prototype, sending products out for testing, acquiring relevant licences and clearances, and so forth).

Crowdfunding may be the right choice for your business if:

  • You only need small capital, but you need it fast,
  • Your products/ideas are relatable and solve real life problems,
  • You can’t raise money via other, more private finance options like personal loans, overdrafts and lines of credit.

Types Of Crowdfunding

Most crowdfunding pitches belong to one of the following types:

Equity Based Crowdfunding (Investment Crowdfunding)

This is, by far, the most important type of crowdfunding.

As a business owner, you ask for and receive funding from investors who, in return, receive a proportionate stake in your business (in the form of equity).

Equity based crowdfunding is ideal for businesses looking to raise a significant sum of money upfront. This is very similar to syndicated angel finance (please read through our guide to angel finance to learn more).

Equity Crowdfunding And Tax Reliefs

Equity based investments in qualifying businesses are eligible to receive tax reliefs (as applicable) under the EIS and SEIS.

Credit Based Crowdfunding

Credit/loan-based crowdfunding is nothing but peer-to-peer finance (P2P finance).

Contributors here act as private lenders who lend you money upfront via the crowdfunding platform you choose. You are then required to repay the crowdfunding platform at a pre-set interest rate.

This is a good alternative finance option for businesses that don’t want to part with equity.

Reward Based Crowdfunding

Reward based crowdfunding allows you – as the borrowing business – to reward contributors in a variety of ways. The most common reward is early access to your products/services.

Donations/Charity Based Crowdfunding

Not all businesses can afford to pay their contributors back. Social enterprises can raise money in the form of donations/charity and use it to fund their business goals.

How Does Crowdfunding Work?

Crowdfunding platforms play an important role here.

There are dozens of crowdfunding platforms presently operational in the UK. Seedrs and Crowdcube are two prominent examples.

Once you know what type of crowdfunding you want to go for, you will need to make public a few important details about your business.

  1. What you’re offering in terms of products/services
  2. How they make a difference
  3. If you have any intellectually protected assets
  4. How much you want to raise
  5. How much you’ve already raised from other means
  6. How you plan on using the funds raised
  7. What the timeline of progress will be
  8. What you’re offering in return

Is Crowdfunding Regulated In The UK?

Most crowdfunding activities in the UK are now regulated by the Financial Conduct Authority.

Loan-based crowdfunding and investment/equity-based crowdfunding are regulated heavily considering the risks involved. The FCA also regulates crowdfunding platforms in line with their policies.

Things To Avoid While Preparing Your Crowdfunding Pitch

As things stand today, there’s no way really for us to tell what percentage of crowdfunding pitches manage to meet their goals. We do, however, have observed a few key trends that seem to be common denominators among campaigns that fail.

Here are the things that you may want to avoid while preparing your crowdfunding pitch:

Confusion And Chaos

This is probably the biggest red flag for any investor. When you prepare your pitch, you need to be as sure as you can about what you’re pitching. Your pitch needs to speak to the investor and answer their questions before they have the chance to even ask them.

Bad Ideas

There’s no way you can sell a bad idea to people and hope to succeed. Paying enough attention to whether the idea is viable, profitable and scalable should be at the centre of your considerations.

Bad Valuation

Many start-ups and young businesses tend to overvalue their ventures. It helps if you bring on board experienced professionals who can evaluate your business for you without any bias. A reasonable evaluation means that potential investors can see how it makes sense to invest.

Crowdfunding Alternatives – Have You Considered These?

Raising money on your own – through personal finance and from your friends/family – is usually the safest bet when dealing with small amounts. However, if you want your business to really take off, you need to take commercial finance more seriously.

There are quite a few commercial finance solutions available in the market that, when utilised properly, can prove to be much more affordable and much less tricky than crowdfunding.

Business Loans

Raise money as and when you need it and use it towards the business expense of your choice – from fulfilling purchase orders to settling existing loans.

Asset Finance

Finance the purchase/lease of expensive equipment through fast, affordable and easy asset finance.

Angel Finance

Bring experienced investors on board and benefit from their expertise and industry connections.

Specialty Loans

Use specialty loans like HMO finance, development finance, bridging loans, BTL mortgages and more to raise money from specialist lenders at low interest rates.

Commercial Finance Network, a leading whole of market broker in the UK, makes it easy for you to match with UK-wide lenders. Every commercial finance application we receive is decided upon within 24 hours – that’s our promise!

To know more or to request a call back, call us on 03303 112 646. You can also fill in this short online form to get started.

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Angel Investing 101 – Everything UK Start-ups & SMEs Need To Know About Angel Finance

The world of modern business, despite having achieved incredible heights over the past century, still values ideas that are worth pursuing. Creativity, innovation and passion have always been at the very core of successful businesses.

This is apparent when you look at the start-ups that ‘make it’ to the top. And no, we aren’t just talking about the big tech names – even a relatively modest, local restaurant that offers something new, exciting and unique has the potential to make it to such a list.

At the same time, it must be conceded that not all ideas are fortunate enough to find the financial backing they deserve, especially from the traditional channels of business finance. Not all banks want to take the risk, not all venture capitalists have the time to go through thousands of pitches they receive every month, and not all high-street lenders understand how the whole thing works.

This is where angel investing comes into the picture.

What Is Angel Investing (Angel Finance)?

Angel investing is an important type of alternative finance options available especially to start-ups and SMEs in their early stages of growth.

Unlike traditional bank loans or business loans, angel investing comes from an individual (the angel investor). Angel investors are typically high net worth individuals who bring on board a great deal of experience in various business operations.

“Combine the angel investors’ ability to fund your ideas along with their experience and industry connections and you have a perfect launchpad to help your business grow.”

The Angel Investment Market In The UK

Angel investing has always been a popular choice among businesses because of its simplicity. Things took a turn for the better as the Enterprise Investment Scheme was introduced in 1993. Since then, over £18 bn has been invested through the EIS alone. The yearly projections by The UKBAA estimate that in 2020 over £2 bn will be invested in start-ups and pre-revenue business models.

Angel investing has also received a boost from an unlikely ally: the pop culture. Popular television shows like Shark Tank and Dragon’s Den have added a touch of glamour to the whole market and helped many first-time investors take the leap of faith and invest their time and money in local start-ups.

How Does Angel Investing Really Work?

As far as the UK angel investing market is concerned, the largest share of investment comes from small to medium scale investors who want to achieve two goals with such investments:

  1. Put their savings/disposable earnings to the most profitable use by investing in a venture that they can understand and help
  2. Claim important tax savings through the EIS.

For most business sectors, angel investors can claim up to £300,000 in EIS tax relief, while businesses cannot raise more than £5mn per year through the EIS. Given these numbers, it’s easy to see why most angel investments lie in the £10,000-500,000 range.

Syndicated angel investments, in which two or more angel investors team up to fund a business, can see this number go as high as £2mn.

Angel Investments Are NOT Loans

If you’re looking to fund your start-up with the help of angels, this is the very first thing you need to know: angel investments are nothing like business loans.

In exchange for the money your business receives, you’ll be required to give up equity to the investor. The amount of equity you ‘sell’ depends on the investment appetite of the investor.

The Risk

Angel investments are inherently risky for the investor since they have to put their money on the line. The risk is mitigated by the potential of the business in question to provide returns that are significantly higher than those provided by other investment options.

Angel Investments And Equity

The only potential downside to angel investment, from the business owner’s point of view, is the sharing of ownership in the business. Most businesses, in their early stages, aren’t ready to give up a significant chunk of equity.

Angels, however, are open to negotiations when it comes to striking a mutually beneficial deal. Moreover, angel investors looking to make the most of EIS/SEIS tax reliefs cannot hold more than 30% of the equity.

It’s common for investors to ask for equity in the range of 5 to 20%.

Has Your Business Got What It Takes?

It’s not always easy to predict what an angel investor would look for in an investment opportunity. From what we, as a leading commercial finance broker, have observed over the years, there’s a recurring theme that you may want to judge your business by.

Real Life Value

Angel investors usually prefer businesses that aim to add real-life value. Products and services that solve real-life problems always make for a good pitch.

The People

Angel investors, being individuals, prefer to work with people who are motivated and prepared to do what it takes to succeed. It’s not enough to just have an idea that works, it’s equally important for them to know that you believe in this idea. It’s probably the most intangible aspect of this discussion, but it’s as important as any other.

The Numbers

Investors, regardless of the type of investment in question, want to know that you have all your numbers figured out. This includes creating a well thought out business plan, among other things.

The Viability

Questions to ask yourself:

Is your business idea viable? Is your main selling point intellectually protected? Will there be any potential conflicts with other parties?

The Future

Questions to ask yourself:

Is there enough room for growth? How do you plan to scale your business? Will the profitability/viability get affected at a larger scale?

The Proof

Everything you do in terms of proof will count in your favour. From an intensive market survey and proof of concept to purchase orders and testimonials, just to name a few examples.

While it’s good to have a business that works not just in theory, it’s not a prerequisite. This eventually comes down to how the promising your business idea is in the investors’ eyes.

The Exit

If you put yourself in the investor’s shoes, you can see why an exit strategy is important. Investors do not generally want to stay on board for decades. They prefer to have an exit window of 5-10 years in which they can make the most of their investment. How you plan on providing them this exit becomes, in this context, an important question.

Angel Investment And Business Stages

As we noted earlier, angel investments are best suited for start-ups that are in their early stages of development. There are three main business stages that are most likely to secure angel finance.

Pre-Revenue Stage

This is the earliest stage for an investor to come on board. Pre-revenue businesses generally have not much to stand on except the power and potential of the idea. It helps if this idea can be/is intellectually protected, has obvious benefits and is proven to work in real life.

Quite naturally, pre-revenue angel finance is fraught with risks, and investors may want a sizeable share of equity for their money.

Pre-Profit Stage

Pre-profit businesses are the ones that have already set up shop (so to speak) and started trading. The revenue they generate isn’t enough to cover their expenses and debts.

At this stage, investors have enough evidence to visualise the profitability.

Post-Profit Stage

Post-profit businesses are the ones that have not only started trading but also gone beyond the break-even point. Such businesses rarely look for angel finance, but when they do, they have a very good chance of securing it.

Commercial Finance Network and Angel Finance: How We Can Help

As a leading whole of market commercial finance broker, Commercial Finance Network is best placed to match your business with angel investors who can offer invaluable industry experience, funding and expertise.

Our panel of private investors consists of UK-wide angels with years’ worth of investing experience. When you work with us, we make sure that your ideas – they may well be the next big thing – are placed in front of the right investors.

Angel investing is not just about money, it’s about the priceless experience and expertise that can make all the difference in the world. To know more or to request a call back, call us on 03303 112 646. You can also fill in this short online form to get started.

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CFN New Offices Following Exponential Growth

Commercial Finance Network, a leading whole of market commercial finance broker with UK-wide presence, is moving its operations to a new office location that’s better suited to accommodate the firm’s rapid growth.

Our latest office move, from White Hart Street in the High Wycombe Town Centre, to Basepoint in the Cressex Business Park; comes on the back of a hugely successful 2019, the last six months of which marked over 500% growth in terms of clients serviced. The industry-leading standards of Customer Service and responsiveness have allowed us to consistently exceed our repeat business and referral business targets.

We’ve always identified 2020 to be a very important year for our business, our employees and our partners, and this move is one of the many important milestones we are set to achieve this year.

About Our New Office

We have carefully selected the new office location to streamline our operations and to make visiting us easier for everyone concerned.

A much larger overall area allows us to host more business departments and employees in a single location, adding an edge to our efficiency. The new location is also equipped with state-of-the-art conference rooms and meeting spaces that will allow us to service our clients better.

The sustainable and efficient design of our new location is a part of our conscious efforts to minimise our energy footprint.


47 Basepoint
Cressex Business Park
Lincoln Rd
High Wycombe
HP12 3RL

The Customer Service Experience You Love Is Getting Even Better

We have always taken great pride in being a business that cares. Our industry-leading Customer Service is perhaps the best testimonial for that fact.

As a part of our new and improved Client Charter, we’re thrilled to announce features that will make the entire experience even smoother for our customers.

For starters, we are moving on from voicemail. Each and every call you make to us will be answered by a real human within six rings, seven days a week, 365 days of the year. Moreover, every email we receive will be responded to within 4 working hours. We’re breaking new ground – and we’d love to have you visit us at our new location! As always, you can call us on 03303 112 646 or Contact Us via our online form.

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Balance Sheet Lending – Everything you need to know

Balance Sheet Lending: How Do These Loans Work?

Understanding what balance sheet lending is and the benefits it offers small business owners and entrepreneurs will help determine if a balance sheet loan is right for you. Here’s an in-depth look at how it works and how it compares to other funding solutions.

Are you considering a balance sheet loan? For many business owners and entrepreneurs, balance sheet lending has become the funding solution of choice.

This kind of loan is typically offered by smaller financial institutions and the debt is kept on the original lenders’ books.

Before you decide if this is the best solution for you, the team at Commercial Finance Network encourages you to learn how it works as well as the advantages and disadvantages that come along with this type of funding.

What Is Balance Sheet Lending?

Also referred to as portfolio lending, balance sheet lending is when the original lender of a loan keeps the debt on their financial statements throughout the loan’s life cycle.

In short, when you get a balance sheet loan, the lender takes on all the risk, holding all the money they’ve loaned on their balance sheet.

More often than not, balance sheet lenders are small financial institutions, like local savings and loan banks and life insurance companies, mainly financing small and medium properties.

Due to their small size, these lenders will give you around 65% of the funds needed for a purchase, which is lower than what larger financial lenders would provide. This is in part because balance sheet lenders have less capital to work with, but also because they are more conventional when it comes to accepting forecasts of increased profits.

How Does Balance Sheet Lending Work?

Balance sheet lenders need to buy their money in advance. The money comes from a number of sources that include family offices, investment banks and financial markets.

By the time it is ready to be disbursed to a borrower, it has gone through a lot of hands (mainly investment funds and money markets), with each clipping the ticket on its way through.

This makes the money pretty expensive for the balance sheet lender. Lenders will pass the cost of acquiring the money off to the borrower along with the margin they need to charge to cover any loan losses they are liable for.

This can lead to very high APRs for unsecured business loans – close to 100%. Before you get locked into loans with high APRs, speak with a Commercial Finance Network specialist to avoid overpaying for a much-needed capital infusion.

Balance Sheet Lending vs. P2P Lending: What’s the Difference?

We’ve covered balance sheet lending, but another category of lending comes in the form of P2P lending.

P2P, or peer-to-peer lending, is an alternative funding solution that allows you to borrow money from investors and individuals instead of financial institutions like credit unions or traditional banks.

Essentially, people with excess money offer to lend money to borrowers using online services. A P2P service, which is usually a website, is a central marketplace that facilitates funding arrangements by linking investors with borrowers (which is why P2P lending is also called marketplace lending).

To know which is the better option for your particular situation, it helps to know the major differences between them.

Here are the main differences between the two types of lenders.


  • Balance sheet: the cost of obtaining the money and the cost to cover operating costs and loan losses are passed onto the borrower. Prices can vary greatly.

The Funding Process

  • Balance sheet: once an application is approved, funds are readily available.
  • P2P: loans may be funded instantly or may undergo a funding period. In fact, P2P platforms are constantly struggling to balance capital supplied by lenders with the capital demanded by borrowers, which can lead to a funding period prolonged even further for borrowers.

How Risk is Structured

  • Balance sheet lending: the lender will carry all of the risk for any losses and must price to account for any losses. 
  • P2P lending: investors take on risk directly when investing in specific loans, which is why they diversify their risk across multiple loans.

Advantages of Balance Sheet Lending

There are a number of benefits that come along with getting a balance sheet loan.

  • Direct Communication with Lender

In the event that a problem arises, borrowers are able to speak directly with the original lender. With traditional financing, the original lender may sell your debt to a thirty party (collection company) and that third party may sell it to another company. This can make it very difficult to catch on your loan if you want to pay the outstanding debt because you’ll have to first identify the company holding your debt.

  • Easier to Manage

When your debt is sold to another company, repayment rules may change – again and again. It makes sense that working with a single lender will be easier for borrowers.

  • Reduced Risk

Borrowers aren’t usually required to place an item on the balance sheet because the item isn’t a liability or asset, thus minimising risk.

  • Rapid Company Expansion

Balance sheet loans are commonly used to help a company to expand quickly. This may be purchasing materials or labour, opening a new location or creating a new line of products. Sometimes costs arise quickly, no matter the projected budget, and a balance sheet loan gives smaller companies the ability to access capital to meet unexpected demands and benefit from future growth.

If you are still unsure if balance sheet lending is right for you, our team of Commercial Finance Network special advisers can help determine benefits you may be unable to see.  

Why Do Lenders Consider These High-Risk Loans?

Most balance sheet lenders are large investors and banks with a long history in their industry. These are the big players that have very deep pockets and are in a good position to hold the risk that a balance sheet loan demands.

Due to their holdings and size, these lenders can grow a large segment of these loans. Additionally, they may offer a huge amount of these kinds of loans to a wide variety of borrowers, helping to reduce their risk and increase security through diversifying.

Balance sheet lenders retain a loan for its lifetime, earning interest for the entire lifecycle of the loan. This increases the rate of return and provides lenders with long term, steady cash flow. A higher rate of return allows them to be more fluid with their lending and offer people in unconventional situations more opportunities for loans.

This is the reason why they don’t mind investing heavily in balance sheet loans: these kinds of loans will typically offer larger returns than conventional loans, making them a very sustainable and scalable type lending for investors and banks with a lot of money.

The Costs of Balance Sheet Lending

The costs are going to vary depending on a number of factors and while the upfront costs and interest rates tend to be higher than traditional financing options, think about it as renting money for a short period of time and the numbers will speak for themselves.

Non-conventional lending, like balance sheet loans, are good for those who have outstanding credit, have significant equity (or down payment) and are financially stable, but are facing a situation that is preventing you from qualifying from more traditional options.

It’s important to consult specialists, like those at Commercial Finance Network, to ensure you can cover costs and, in fact, get the best pricing structure possible.

How to Apply for a Balance Sheet Loan

Due to the fact that financial statements are a vital barometer of a business’s success, they are a key requirement for obtaining extra capital. You’ll improve your chances of getting a loan with bulletproof financial statements.

Your balance sheet shows what you owe vs. what you own and any shareholder investments. If your assets outweigh your liabilities, this is an indication of a strong fiscal position. A useful tool to help identify trends, develop strategies and capitalize on your company’s strengths and mitigate weaknesses, it is a useful way to understand your business’s stability, liquidity and worth.

Profit and loss statements should be in order as they show how your company is doing over time. For a loan application, you should have a forecast that outlines sales and expense projections for the next two years.

Lastly, your projected cash flow statement, or cash flow forecast, must be well organized as it is one of the most essential statements for helping secure a loan. If there’s a discrepancy between the rate at which cash flows into your business and the rate it exists, you may have a cash flow problem. Lenders will think you will not be able to repay a loan.

Though, this is just the beginning steps, preparing and maintain financial reports will go a long way in supporting your loan application.


Nobody wants to get stuck overpaying for a loan. When put into perspective, balance sheet lending is a short-term solution that gives you the chance to take advantage of long-term investment opportunities.

At the end of the day, this is the right decision for you if you are in a position to refinance out the loan in no more than 3 years and it makes financial sense. Every situation is different and everyone has their own financial goals so the best thing to do is review your scenario with experienced lenders that offer more than one type of loan. At Commercial Finance Network, our team of specialists can answer all your questions and walk you through the fine print. Fill out our short contact form or call us on 03303 112 646 and we can help determine what loan is best for you.

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Why You Should Use A Commercial Finance Broker – The Benefits Of Working With A Mortgage Broker

Working with a commercial finance broker has many benefits other than the ones that are obvious. Here’s why and how it can save you a great deal of time, money and hassle.

The commercial finance sector has long been a mystery to most businesses that have wanted to borrow money from time to time. The days of simply walking into your local bank and finalising a handshake deal with the manager are long gone. Banks – despite their best efforts – are hardly able anymore to cater to the huge capital demands that UK businesses have.

Naturally, private lenders have managed to fill this gap in supply. But that has also spelt trouble for the borrowers in terms of predatory lending and other ills. Moreover, many borrowing businesses don’t have at their disposal the necessary experience to understand all the aspects involved in a commercial loan. This is where commercial finance brokers come into play.

There are many reasons why you should use the services of an experienced, responsible and licenced broker.

Before We Start – What Is A Mortgage Broker (Or Finance Broker)?

Many people – especially those who haven’t borrowed before – have a flawed understanding what finance brokers really do.

In the simplest of words, a finance broker or a mortgage broker is a professional entity (an individual or a firm) licenced to offer expert finance advice and match your loan requirements with suitable offers from lenders.

Brokers operate in almost every lending sphere – from small-scale personal finance to large-scale commercial finance. Commercial finance brokers (like Commercial Finance Network) specialise in helping businesses find just the right kind of finance deal.

While the finer aspects of why you should use the services of a broker will be discussed below, it should suffice for now to say that an experienced broker can help your business through tricky situations of cash and/or credit crunch.

Why Approaching A Lender Directly May Not Always Work

Getting a business loan used to be a straightforward affair not too long ago. Just contact the local bank branch or high street lender, let them know of your requirements and accept one of their ready-made finance products – easy as you like.

The simplicity in this structure, however, came at your expense. Getting into a retail finance deal is almost always a bad idea for a business because it’s not only more expensive, it fails to bring to your notice all the possible options you can choose from.

In addition, approaching lenders directly is a tedious and time-consuming process, regardless of how straightforward it may seem to be. If a lender turns your application down, you have to repeat the whole process again, leading to multiple soft and hard credit checks that leave their footprints all over your credit report.

Here’s why using an experienced broker gives your loan application an edge.

1. Brokers Make Borrowing Easier, Faster And Safer

Approaching a lender directly for a commercial loan may not always be the best idea, as we just discussed. It can not only drain your resources quickly; it also almost always leads to you getting a rather unfair deal.

Commercial finance brokers help you avoid this scenario by making the entire borrowing process smoother, faster and safer. Commercial Finance Network, for example, is among the handful of brokers out there who have an impeccable track record of turning around loan applications within 24 hours.

Moreover, all licenced brokers are obligated to treat your personal details with utmost care. When you use a broker’s services, you’re still in charge of your application, at all times. 

2. You Get To Choose From Offers You Would Otherwise Have Never Seen

This is probably the most important benefit of using commercial finance broker services.

When you approach a lender directly, they can only produce quotes that are drawn from the products they already offer. There is no room for customisation, and you will often have to make do with incompatible loan products just to save the day.

For example, if you’re applying for asset finance and the lender only offers lump-sum business loans, you will be left with an offer that makes no sense in terms of your requirements.

Working with a broker eliminates this problem altogether. Many lenders work exclusively with brokers and offer broker-only finance products that wouldn’t be accessible to you if you were to approach them on your own.

You can go a step ahead and work with a whole of market commercial finance broker like Commercial Finance Network to make sure that you receive offers from UK-wide lenders.

3. Brokers Can Save You Money

If you’re worried about broker fees and charges, you shouldn’t be.

Brokers who work with specialist lenders are often able to produce quotes that are much cheaper than their retail counterparts. Eventually, the money you save in the form of lower interest rates and faster disbursals outweighs any broker fees you would be required to pay.

An FCA-regulated and responsible broker like Commercial Finance Network will never charge you hidden fees. You will know exactly how much you’ll be paying before you get into a deal.

4. You Can Access Specialist Lenders

Specialist lenders are typically small to medium sized lenders who only offer highly specialised finance products like invoice finance, development finance and HMO loans.

Since it saves them a great deal of hassle, many such specialist lenders prefer to work exclusively with brokers. In essence, using a broker’s services helps you unlock offers from specialist lenders.

Working with specialist lenders also means that the lender can offer invaluable business insights and advice, making every loan offer that much more rewarding.

5. You Cannot Buy Experience

A reputed broker brings with them years’ worth of experience that you cannot really put a monetary value on.

Such brokers know how to navigate through tricky finance situations that you wouldn’t otherwise be able to handle on your own.

Whether you want to fast-track your BTL loan, get a business loan despite poor credit history, seek guidance regarding a particularly unique valuation and planning permission problem or customise your repayment plan based on your income, an experienced broker like Commercial Finance Network can certainly help you.

6. Brokers Understand Your Affordability Better

Unfortunately, over the years, both borrowers and lenders have time and again managed to downplay the importance of understanding creditworthiness and affordability. This has, quite predictably, paved the way for unreasonably structured, unfairly priced loans that – at times – border on being predatory.

Using a commercial finance broker means you conveniently stay away from this debt trap. Brokers know how to best judge your affordability based on your income, your assets and your spending, allowing them to only produce offers that are in your best interests.

7. Brokers Can Offer Precious Financial Advice

There’s a world of difference between personal finance and commercial finance – a fact many borrowing businesses fail to take into account while applying for a loan.

Poor judgement and uninformed decisions lead to mistakes that the borrower has to live with for years, if not decades. You can get around this problem by soliciting financial advice from a responsible broker like Commercial Finance Network.

Summing Up – Here’s Why You Should Use A Commercial Finance Broker

  • Save time and energy
  • Choose from market-wide offers
  • Save money
  • Benefit from the broker’s experience and expertise
  • Stay away from unaffordable loans
  • Avail expert advice from FCA regulated professionals

Choosing A Commercial Finance Broker – Things To Keep In Mind

Now that we’ve talked at length about what a commercial finance broker brings to the table for you, it’s time to see what you should look for while choosing one.

There are no yardsticks or guidelines set in stone here, but the following points will certainly help you make an informed and educated choice.

1. Are They Licenced And Regulated By The FCA?

This is perhaps the most important question you should ask.

The Financial Conduct Authority is the sole and stringent regulator of all commercial finance activities in the UK. As a rule of thumb, you should refrain from working with brokers who don’t have the FCA licence.

How To Check If Your Broker Is FCA Regulated

Checking whether your broker is FCA-regulated or not is easy. For starters, regulated brokers will have the FCA reference number and other associated information prominently displayed on their website. If they haven’t, you can always contact them regarding the status of their licence.

You can cross-check this information by visiting the FCA register.

For example, Commercial Finance Network is FCA regulated with reference number 796413.

2. Are They Associated With Any Trade Organisations Of Repute?

This isn’t really a non-negotiable, but it still gives you a good idea of the standing the broker enjoys in the industry.

Look for any certifications and memberships that lend credibility to the broker’s operations.

For example, Commercial Finance Network is a proud member of the National Association of Commercial Finance Brokers (NACFB), the largest trade association of UK-wide brokers.

3. Do They Handle Your Data Responsibly?

All businesses are required to handle your personal information and other data they collect responsibly. This applies even more so for brokers who need to collect your important personal and financial details.

When you visit your broker’s website, look for the data protection policy and/or privacy policy page. It is usually located in the footer section of the website.

A responsible broker is typically GDPR compliant and registered with the Information Commissioner’s Office (ICO).

For example, the Commercial Finance Network website is fully GDPR compliant and registered with the ICO.

4. Do They Specialise In Commercial Finance?

Many brokers out there try very hard to merge personal finance products with their commercial counterparts. This isn’t usually a good idea since commercial finance is much more robust in terms of product flexibility and variety.

If your broker offers exclusively commercial finance products like asset finance, business loans, HMO finance among others, it’s a good starting point.

5. Can They Compare The Market?

Whole of market brokers can compare the market and find lenders who are willing to base their quotes on your requirements. In the long run, this has an immense positive impact on your borrowings.

6. How Does It All Work?

Ask your broker the following questions to understand how their services work:

  • Will you need to visit their office?
  • What paperwork does the process involve?
  • Can you submit the necessary documents online?
  • What about the turnaround time on your application?

7. What Are The Broker Charges And Fees?

It’s imperative that you know all about the charges and fees you’ll be required to pay. Many brokers offer no-obligation quotes, while some may require you to pay a processing/admin fee even when you decide not to accept the loan offer.

It’s also important to know and understand when the charges will kick in – before you apply, after you apply or after you accept an offer.

Working With A Responsible Broker Means Working On Your Own Terms

Getting into a finance deal that isn’t cut out for your business’ requirements is never worth it. You will not only be required to repay more than you really should, you will also miss out on a number of features that specialist lenders can offer you.

Commercial Finance Network – a leading whole of market broker in the UK – makes your life easier by finding just the right kind of loan offers for you. Our commercial finance services span the entire range – from all-purpose commercial finance and mortgages to customised asset finance and invoice finance solutions.

24-hour processing, high approval rates, cheap interest rates and flexible repayment – we’ve got everything your business needs and more. Complete this short online form to get started or call us on 03303 122 646 to speak with a Specialist Mortgage Advisor now!

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Commercial Finance Network Joins NACFB

Commercial Finance Network, a leading whole-of-market Commercial Finance Broker, has recently been granted full membership to the National Association of Commercial Finance Brokers (NACFB).

The NACFB is counted as the most prestigious and renowned commercial finance association in the UK. This membership comes as a recognition of the transparent and responsible broking and lending practices followed by the Commercial Finance Network and its associates for several years.

When asked about this significant acknowledgment, Dan Yorke, MD at CFN, said that he is extremely delighted to be formally associated with the NACFB. “Commercial Finance Network has been an industry innovator for several years and much of the good work we’ve done has come directly as a result of the high standards of transparency we’ve set for ourselves. This acknowledgement is great news for all of us here at CFN as it’s, in a way, a seal of approval for our standing in the industry,” he added.

The NACFB membership now puts Commercial Finance Network in the company of the best commercial finance brokers in the UK. It will also allow the company to add over a hundred specialist commercial lenders to their panel.


National Association of Commercial Finance Brokers comprises of over 1,600 commercial finance brokers in the UK. All members are extensively vetted and required to have a credible track record of responsible operations, along with longstanding partnerships with nationally recognised lenders.

About Commercial Finance Network

Commercial Finance Network is a whole of market commercial finance broker in the UK. The company has been consistently successful in bridging the gap between businesses and capital. The company has been recognised as a market innovator, with a primary focus on Customer Service and responsiveness.

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Contractor Mortgages – Top Tips From Our Experts And Lenders

Thinking of applying for a contractor mortgage? Improve your chances of getting approved with these tips from our in-house experts and panel lenders.

Contractors and freelancers have always had to struggle in order to find a lender who would agree to the terms. This took a turn for the worse in the aftermath of the 2008 global recession.

If you’re a contractor, you would know that banks and high street lenders don’t really have a positive track record of accepting contractor mortgage applications. That, however, does not mean that contractors, freelancers and other self-employed professionals cannot get a mortgage to finance the purchase of their dream home. Here are some important tips from our in-house contractor mortgage experts and specialist lenders on our panel to help you understand contractor mortgages better and in turn be well prepared before applying for one.

Do You Qualify For A Contractor Mortgage?

As far as contractor mortgages go, the first sign of confusion arises from the very question of eligibility.

The problem here is that many contractors learn about contractor mortgages after their applications are turned down for regular mortgage products. At this point, it should be enough to say that all contractors, freelancers and self-employed professionals who have ongoing, active contracts are eligible to apply for contractor mortgages.


Most lenders are happy to bracket all contractors in a single group for the sake of simplicity, with sub-groups corresponding to various industries and sectors. For example, we have on our panel lenders who specialise in IT contractor mortgages, home services contractor mortgages and so forth.

Directors of limited companies who act as independent contractors (or employed contractors with longer contract tenures) and self-employed professionals/freelancers (registered as sole traders) are, for instance, eligible for contractor mortgages.

How Contractor Mortgages Differ From Other Mortgages

Contractor mortgages are fundamentally no different. They allow the borrower to borrow the money from the lender over a long period of time, while the property in question acts as the security.

The difference stems only from the fact that contractor mortgages are customised to meet the peculiar financial position contractors find themselves in. You may have noticed that it’s difficult to get your application through if you can’t demonstrate a reliable stream of income – a huge problem.

As a way of solving this problem, lenders are willing to undertake additional risk by disbursing contractor mortgages. This risk often manifests itself in two forms – relatively higher deposit amounts and interest rates. This is, however, not to say that contractor mortgages are always more expensive than other mortgage products and contractors, essentially speaking, are forced to accept a rough deal. Read on to understand what we mean by this.

Contractor Mortgages And High Street Lenders – A Bad Combination

At Commercial Finance Network, we broker a range of contractor mortgages for our customers on a regular basis. Over the years, we’ve observed a common thread that runs across many applications we receive – applicants choose to approach us (the broker) only upon getting turned down by high street lenders.

Our experience of operating in this industry for over a decade tells us that approaching high street lenders for any specialty finance product – contractor mortgages, HMO finance or even invoice finance – is a bad move. Most high street lenders lack the resources or experience to handle any case that doesn’t conform to the norm, and hence, you are very likely to receive an expensive offer (if at all you’re to receive one, that is).

In essence, if you’re looking for a contractor mortgage, high street lenders will have little to offer.

What do you do then?

Approach Specialist Lenders

Specialist lenders are the ones who bring on board adequate experience and expertise to handle your exact requirements. In this case, a specialist contractor mortgage lender will know how to assess your credit history, your history of contracts, your ongoing contracts and your affordability, putting them in a better position to construct a mortgage offer that takes into account all the angles.

 Of course, it’s extremely difficult to approach specialist lenders on your own if you don’t have the right contacts. This is where a leading whole of market broker like Commercial Finance Network comes in. We forward your application to our panel of UK-wide specialist lenders, thereby improving your chances of securing a fair, affordable and swift contractor mortgage offer. Applying is easy – call us on 03303 112 646 or fill in this quick application form.

Yes, New Contractors Can Indeed Get Contractor Mortgages!

It’s one of the long-floating contractor mortgage myths – if you are a new contractor, the doors are already closed on you.

This is, we’re happy to report, far from the reality.

One of the benefits of working with an industry-leading broker like Commercial Finance Network is that your application reaches contractor-friendly lenders who are willing to assess your case even when you are a new contractor. Of course, it’s always a good thing if you have been operating as a contractor for 2-3 years.

However, it’s advisable to have an ongoing contract that the lenders can use to annualise your day rate (the longer the contract, the better deal you’re likely to get).

What Are Annualised Contractor Day Rates?

If you currently have an active contract and are paid a fixed day rate, lenders may be willing to annualise this rate to arrive at an estimate that fairly reflects your yearly income.

However, we would like to inform our readers that not all lenders follow this practice, and the ones who do may require you to have a long term contract in place. If you have an active contract for the next 12 months, your chances of getting a good contractor mortgage offer automatically receive a boost.

How Do Lenders Calculate Annualised Day Rates?

It’s a straightforward process that involves a couple of assumptions. It may, however, vary from one lender to another.

If you are a contractor whose contract stipulates a flat day rate of £300 and you offer your services 5 days a week, your weekly income comes to be £1,500. Discounting the holidays, it’s safe to say that most workers get paid for 43-48 weeks a year.

Assuming that you work for 48 weeks over a 12-month contract term, your annualised day rate will be £72,000. The lender will then be able to calculate your affordability based on this number.

Making The Most Of Your Company Account

This is a question we get asked often – Can I utilise the cash surplus in my company account towards my contractor mortgage?

There’s no objective answer to this question, and we strongly recommend consulting with qualified finance experts. However, as a rule of thumb, we can safely say that you can produce company accounts (for a limited company, that is) to bolster your mortgage case. Lenders will always be better placed to offer you a good deal if you can convince them that you’re running a profitable company and you aren’t drawing high salaries for reasons such as tax concessions.

On the other hand, if you’re merely working as a sole trader or in a partnership, you may be able to use company accounts to offset the deposit/repayments on your contractor mortgage.

This Goes Without Saying: Keep Your Credit History Clean!

The most common reason for lenders to turn down contractor mortgage applications are unconvincing credit reports.

We understand that personal situations and other financial difficulties can damage your credit score (it’s a very common scenario, and you shouldn’t feel disheartened about it). However, you should take positive steps to repairing your credit score and sorting out your credit history as soon as you can. Working consistently towards this goal – paying bills, clearing the past dues, settling outstanding debts, getting rid of unwanted credit cards are a few steps you can take in this regard – usually does the trick.

To know about the common scenarios that hurt your credit score, do read through our bad credit mortgage guide.

Contracting Breaks May Hurt Your Application

One of the very first points we made here was that you should avoid high street lenders for specialty products like contractor and freelancer mortgages. Here’s another reason that supports this point: high street lenders are almost always ill-prepared to understand your contracting situation.

Most people choose to start working as a contractor or a freelancer to embrace a certain lifestyle – one that lets them have a better control over their lives. After all, who wouldn’t want such professional and personal freedom?

This, however, comes with its own risks. Every contractor knows that it’s not always easy to bag contracts that run into years. Applying for a new contract, going through the whole process and essentially setting up a new shop every few months naturally leads to contracting breaks.

These breaks, even when they are intentional, don’t do you much good when you’re applying for a contractor mortgage. Therefore, we advise you to avoid letting such breaks creep in. Your focus should be on establishing an unbroken, continuous history of contracting (which, in all probability, will also help your finances). For reference, many lenders on our specialist panel prefer that you don’t have contracting breaks that are longer than 8 weeks over a 12-month period.

Contractor Mortgage Deposits

As a rule of thumb, lenders can offer better quotes when you are ready to put down a bigger deposit. As the deposit amount goes up, the lender’s risk goes down, and you may get interest rates that are much lower than ongoing market rates.

Generally speaking, contractor or freelancer mortgages do require you to put up a 10% (or higher) deposit. If you can produce a good track record of contracting, healthy affordability and good credit score, this number may go down (subject to the lender’s discretion and policies).

Know And Understand The Charges Involved

As a responsible, industry-leading mortgage broker, we will always keep you in the loop regarding our fees and charges. But that isn’t it – the lender will charge you an additional set of charges. These include:

  • Arrangement fees
  • Admin charges
  • Stamp duty
  • Property valuation charges
  • And others

The Best Contractor Mortgage Is The One That Fits Your Needs

Applying for a mortgage without having the luxury of predictable income under your belt can be stressful. Being turned down by multiple lenders doesn’t help at all in such a scenario.

Thankfully, you can now bypass all the hassle by reaching out to specialist lenders across the UK using our affordable, flexible and fast contractor mortgage broking services. Remember – a good mortgage deal can save you thousands of pounds in the long run.

To speak with one of our Contractor Mortgage Specialists now, call us on 03303 112 646. You can also fill in this simple form to get started.

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What Is Equity Release And How Does It Work? – Important Equity Release Tips

If you’re looking to get your hands on cash to fund your lifestyle after 55, equity release can be one of the options you may want to consider. Like all finance products, equity release comes with its positives and negatives – and that’s exactly what we’ll discuss in this handy, simple guide to understanding equity release, along with useful tips from our experts.

Planning for your retirement can be a seriously daunting task – so much so that a significant share of Britons never gets around to doing it. But that’s not it. More often than not, your savings, investments and retirement funds, even when put together, may just fall short being enough to fund your lifestyle.

On average, UK seniors need £27,000 or more to lead a comfortable lifestyle. Given the ever-increasing costs of healthcare and leisure, it’s safe to assume that this number will go up faster than most retirees and seniors can catch up with. This – despite the fact that many seniors strive to save a good deal of money each year – is a sign of worry. In fact, in April 2019, the UK households, companies and the government all went in deficit together – something that’s never happened before.

If you find yourself in a situation where you need more cash to meet the monthly requirements, the obvious choice will be to downsize. If you don’t want to downsize, equity release can be a viable alternative – provided that you know what it is, how it works and what the potential downsides of getting into such a contract can be.

What Is Equity Release?

Equity release is a way of freeing up the value of your home without having to move. By and large, it’s a fairly simple concept – you give up partial/full equity and you get cash in return as a lumpsum or in monthly instalments.

Equity release allows you to forgo the inconvenience/inability to move. But keep in mind: you’ll need to understand the finer details.

Equity Release: Key Points

  • The cash you’ll get upon releasing the equity will be tax free. You’ll be free to utilise it as you want to.
  • Equity release options are available to homeowners who are 55 years of age, or older. Home reversion plans are available to seniors who are 65 years of age or older.

Our equity release mortgage brokerage guide discusses these points – along with various types of equity release – in greater details.

Let’s now move on to discussing a few important equity release tips from our in-house experts, lenders and industry specialists.

1. Weigh Other Options First

Equity release, at the end of the day, is a mortgage you raise by keeping as security your share in your home. So, as is the case with all other mortgages, it’s advisable that you are aware of your other options.

The most obvious one would be downsizing. If you’re in good health and have no trouble making the move, downsizing can save you a great deal of money. It can not only unlock the full market value of your home, but it’ll also allow you to cut down on future maintenance expenses and higher property taxes. If not, you can think about renting a portion of your house or converting it into an HMO (this will, of course, need investment). If you want to learn more about how HMOs work, do go through our HMO finance explainer

In addition, you should explore options like utilising your savings and investments, if that makes financial sense in the longer run. 

2. Understand And Be Aware Of Your Monthly Expenses

Later life care is a sensitive issue, and yet very few people try to address it head-on. The first rule of successful money management is to be aware of your expenses. So, before you decide that equity release is the way you want to go, you need to be very sure of how much is needed to fund your lifestyle including leisure and luxury.

Some important aspects are non-negotiable. For example, if you need to plan for home care, you need to take into account the fact that home care professionals can charge you up to £30 per hour. In addition, if you wish to fulfil your travel/vacation goals, you’ll want to have at your disposal upwards of £5,000 in free cash each year.

This is just to show that when you calculate all your expenses correctly – with enough leeway for miscellaneous and incidental outgoings – you will be in a better position to decide whether you need to release equity at all (and how much, if you need to).

Important – Equity Release May Affect Certain Benefits

Since equity release concerns homeowners aged 55 or more, it’s important to consider its impact on some of the benefits you may be receiving.

Going ahead with equity release means that there is a significant change in your affordability. With free cash lying in your bank (or a monthly stream of income guaranteed over a period of time), your finances assume a whole new shape. What this means is that there is a possibility of this having a direct impact on means-tested benefits you are presently entitled to receiving.

Understanding What Means-Tested Benefits Are

Means-tested benefits, in the simplest of terms, are the benefits you receive as a result of being in a certain financial position of advantage/disadvantage.

For example, couples whose weekly income is lower than the present benchmark of £255.25 may receive Pension Credit (a means-tested benefit). 

Which Benefits Does Equity Release Impact?

In most cases, we’ve observed that equity release impacts Pension Credit and Council Tax Reduction.

As we stated in the earlier point, if releasing equity moves your weekly income above the benchmark, your Pension Credit benefit may get affected. Similarly, Council Tax Reduction presently allows pensioners with capital smaller than £16,000 certain tax concessions. These may no longer be applicable if releasing equity takes your capital over £16,000.

Calculate The Cost Of Your Equity Release Mortgage Beforehand

We mentioned earlier that every qualified broker will provide you with a detailed breakdown of their fees and commissions. These will be the upfront and one-off costs of releasing your equity. The long-term costs will, however, be determined by the type of equity release you choose and the interest rate on offer.

Typically, equity release mortgages are more expensive than regular mortgages. For example, our lenders can offer you equity release quotes with interests rates up to or lower than 5% (a representative number).

Let’s assume that you’re 60, your property is worth £150,000 and you want to release a third of your equity to convert it into a lifetime mortgage worth £50,000 (the one that will last your lifetime).

Assuming that the lender charges you interest at 5% per year, here’s what the breakdown of costs will look like over the next 15 years.

What Is Equity Release And How Does It Work? – Important Equity Release Tips Commercial Finance Network

As you can notice, in this case, the principal doubles roughly every 14 years. That, indeed, is a steep climb when compared to regular mortgages. This aspect of equity release should be given due attention when you’re applying for equity release offers.

Additional Costs You Should Expect

Keeping aside the brokerage and commission, you will need to arrange for additional arrangement costs.

These usually vary from one case to another, and the typical ones include solicitor fees, valuation fees, administration charges – not to mention the stamp duty on the agreement. Many lenders offer to pay for these costs by making necessary deductions from your mortgage principal.

How Much Should You Borrow?

This, of course, is your call. Lenders on our panel offer both lifetime mortgage and home reversion plans that can be customised to fit your requirements. That, however, really isn’t the issue here.

It’s essential to understand here that – thanks to relatively higher interest rates – equity release mortgages become more expensive over time. The longer you borrow for, the more you’ll pay – it’s as simple as that.

Hence, it’s advisable that you borrow only the amount that you really need and think is adequate to see you through. If you can compartmentalise your requirements, you’ll know what the pressing needs are.

You can always release more equity at a later date or consider structuring a drawdown lifetime mortgage plan that allows you to draw cash from your equity as and when you need to.

A Lump Sum Or Monthly Income?

This is another important consideration.

Most lenders are happy to let you decide the mode. A lump sum allows you to take care of major expenses right away (think medical/care bills, other unpaid bills, outstanding loan/mortgage payments, gifting money to your loved ones or buying a new car). You can also choose to use this cash to finance your vacations and other leisure activities.

On the other hand, monthly income makes sure that you’ll have a reliable, guaranteed stream of income to take care of your regular expenses each month.

At the end of the day, it all boils down to what your requirements are and how you want to go about spending your money.

Can You Make Monthly Repayments?

An average equity release case will go through the borrower’s lifetime without any monthly repayment being made. This is the most convenient and common mode of operation for equity release products.

However, some lenders may allow you to make monthly repayments towards the interest. This means that you keep the mortgage active by repaying the monthly interest and making sure that – in the long run – the mortgage turns out to be much cheaper.

This is better explained with an example. We’ll carry forward the same numbers from our previous example.

We saw that over ten years, including the compounded interest, the mortgage value will swell to £81,444 from £50,000. In other words, the cost of mortgage will turn out to be £31,444 over ten years.

If you, however, were to pay the interest off each month, the same cost will come down to £25,000.

Will You Be Able To Leave An Inheritance?

It’s a question that’s very important to many borrowers. If you want to pass your assets on to your loved ones, you’ll need to understand that releasing equity means that there’ll be lesser value for them to inherit.

If you want to make sure that you leave a certain amount as inheritance, you can make necessary arrangements by adding an inheritance protection clause to your equity release plan. This may, however, bring down the mortgage principal.

Can You Transfer The Equity Release Plan?

Despite releasing equity, many borrowers feel the need to downsize anyway. Such a scenario warrants an important question – can you transfer an equity release agreement from one property to another?

The answer depends entirely on the lender’s policies and the terms of agreement. It’s best to have this aspect settled while drawing up the equity release plan.

Assess The Property Market

Since every equity release plan is essentially tied to the market value of your home, the overall property market plays an important role in how much you’ll have to pay back.

If the market value of your property goes down, you’ll owe much more to the lender. This, however, only applies for lifetimes equity release mortgages. Home reversion plans make your position more or less immune from market ups and downs.

With Caution And Care, You Can Make Equity Release Work!

Releasing equity is an important decision and should be taken with due deliberation and care. You may contact the Equity Release Council for in-depth information about equity release products.

At Commercial Finance Network, we accept equity release mortgage applications from homeowners across the UK. Fast decisions, industry-leading practices and an eclectic panel of specialist lenders mean that our equity release brokerage services bring you immense value.

To request a call back from our team of equity release experts, call us on 03303 112 646 or drop us a line here.

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Got Bad Credit? Follow These Adverse Credit Mortgages Tips From Our Experts

It’s bad enough to have bad credit – don’t make it worse. Take the right steps today and boost your chances of getting approved for an adverse credit mortgage from our panel of specialist lenders.

Managing your expenses is an art. It’s never too easy to keep doing all the right things when it comes to spending, saving and investing your income. However, we have spotted a few worrying trends over the last couple of years, and that – more than anything else – is the reason we decided to ask our experts for some tips.

Average UK household debt – as per the latest available figures – stands at over £15,400. A huge chunk of this is made up of unpaid credit card bills. The use of credit cards has increased consistently across the world, and Britons aren’t any exception. By January, 2019, UK credit card holders owed a collective sum of over £72bn.

We’re citing these figures for a reason: Using credit cards recklessly is the top reason for accumulating bad credit.

Taking Bad Credit Seriously

Experian, one of the leading credit reference agencies in the world, reports that there’s immense room for credit education, especially among the 25-30 age group.

For example, the agency reported last year that teenagers typically had better credit record than the users in their 20s – a sure sign of mismanagement of money. Bad credit isn’t a problem that one can just wish away – it takes months to repair a broken credit record. It also means more difficulty in getting the kind of loans one wants and leading the kind of lifestyle one wishes to lead.

Thankfully, bad credit isn’t the end of the road.

Depending on your credit history and your affordability, many lenders are willing to accept bad credit mortgage applications. We, at Commercial Finance Network, help our customers who may have poor credit at their disposal secure customised, low-interest adverse credit mortgages.

A bad credit mortgage is similar to a regular mortgage. It only involves relatively higher interest rates and requires you to put up a higher deposit. With a leading broker like Commercial Finance Network on your side, you can now work with UK-wide specialist lenders who offer some of the lowest interest rates going around.

Here’s how you can maximise your chances of getting approved for a poor credit mortgage.

It’s Always Better To Approach Specialist Lenders

We’ve already talked about the good news – there are many lenders out there willing to help you buy your dream home despite your bad credit.

But this good news comes with a caveat most brokers won’t talk about: Only specialist lenders can boast of reasonable approval rates in this niche. In other words, if you approach a generic mortgage lender with a bad credit mortgage application, you’re almost guaranteed to have to face a rejection. Banks and other mainstream lenders use stringent algorithms to assess mortgage applications, virtually denying many bad credit holders a chance to step onto the property ladder. 

Such a rejection, when accompanied with a ‘hard credit check’, may further dent your credit history.

The only feasible solution to this vicious cycle is to make sure that you aren’t reckless while sending out your adverse credit mortgage applications. Knowing the track record of your lenders is of utmost importance.

It is, however, easier said than done.

That’s where working with an experienced broker counts in your favour. For example, our bad credit mortgage services help you find specialist lenders who know how to assess your applications based on your income potential, expenses and credit history. This immensely improves the probability of getting a fair mortgage quote.  

Know The Typical Bad Credit Situations Inside Out

Knowing what it takes to get approved while also knowing where you stand in regard with these norms is the key to getting a good mortgage deal. Unfortunately, many applicants are unaware of these finer details, thanks mainly to the fact that their brokers never take any effort to spell these out for them.

We broker bad credit mortgages that cover a range of cases, including but not limited to the following:

  • Missed/Delayed Repayments: Nearly every UK household has debt to repay. This isn’t necessarily a bad thing – it just turns out to be problematic when you fail to make the payments on time. Consistent delays or missed repayments can hurt your credit score, pushing you into the bad credit zone.
  • County Court Judgments: CCJs are typically issued when the creditor approaches a court and the court decides that you owe them money. Getting a CCJ doesn’t harm your credit history as long as you settle the dues within a month. In an event you fail to do so, the CCJ will typically be in force for up to 6 years.
  • Bankruptcy: As should be obvious, bankruptcy cases can make it virtually impossible for you to get any credit. In such cases, approaching a specialist bad credit mortgage lender remains the only viable course of action.
  • Repossession: If you already have an ongoing mortgage on a property (or a secured loan against any other asset) and the lender decides to repossess the property on account of missed payments, your credit history will show the repossession event to all future enquirers. While this is an extreme situation, we do come across such cases from time to time.
  • Debt Management Plans: A debt management plan is a product that helps you reduce your monthly outgoings by clubbing your existent loans into a more affordable package. At times, the creditor may put what is routinely referred to as a DMP flag in your history of repayments, letting future creditors know that you had to resort to using a DMP to pay your bills. This is a relatively less adverse situation, in that creditors feel less at risk accepting DMP cases for bad credit loans.
  • Payday Loans: Payday loans are high-interest and short-terms loans. These are immensely controversial products and should ideally be saved only for emergency situations (if at all). Payday loans also have high default rates, meaning that your lender will want to know if you really are capable of repaying your bad credit mortgage.

When you understand these causes, you can get an insight into how lenders treat bad credit mortgage applications.

Important – Take Steps To Repair Your Credit History

We have already mentioned that bad credit isn’t the end of the road, and you can still get a good mortgage deal using our adverse credit mortgage services.

This, however, doesn’t mean that you should always have to pay higher interest rates. The healthier your credit history is, the cheaper your mortgage will be. Moreover, it’s never too late to start taking steps in the right direction to repair your credit.

Repairing your personal or business credit history is a long process that requires consistent efforts. You can start by following these easy points:

How To Access Your Credit Report?

Credit reports are generated by credit reference agencies. You may already know about the leading ones: Equifax, Experian and TransUnion. These agencies work with lenders and banks to build credit reports for individuals and businesses.

To access your credit report from these agencies, you may follow the directions given here:

  1. Experian
  2. Equifax
  3. TransUnion

How To Build Credit History?

You need not take any particular steps to build credit history. Once your file is created, it’ll automatically get updated as per the information received by the agencies from lenders. If there are any discrepancies in your credit report, you can always get them corrected.

How To Get On The Electoral Roll?

Getting on the electoral roll is one easy step that goes a long way towards building your credit score, authenticating your credit report and safeguarding your identity.

Considering how easy it is to get this done, this should be among the first steps you take to repair your credit history before you apply for an adverse credit mortgage.

Use Your Credit Cards Judiciously

As we mentioned earlier, reckless use of credit cards is probably the most common reason for individuals to fall into a debt trap. We understand that not everyone has the convenience of digging into their savings for regular household expenses, but you should maintain a certain level of discipline while using your credit cards.

If you have one of more inactive credit cards, close them as early as you can to avoid having to pay unnecessary maintenance fees. Moreover, think about moving your credit card debt to the cheapest alternative available. Most importantly, make sure that you make timely payments on your credit card bills.

How To Apply For An Adverse Credit Mortgage?

There are two ways to apply for a bad credit mortgage – approaching the lender directly and working with a broker.

Bad credit mortgages are specialty products, and hence, you are at a disadvantage when you approach the lenders directly. On the other hand, when you work with an experienced broker, you not only get qualified advice from their experts, you also get to access mortgage offers from lenders that otherwise may never have been on your radar.

At Commercial Finance Network, we make applying for bad credit mortgages a breeze through our simplified, no-hassle online application portal.

Time Is Of Essence

Repairing a poor credit score can seem like a daunting task. What many applicants don’t realise is that it’s all about long-term affordability. You can damage your credit score over a short time period but repairing it may take much longer.

In other words, you need to be patient and disciplined in your ways over time to boost your chances of getting approved for a bad credit mortgage. If your credit score is in a really poor shape, do consider letting a few months pass before you apply for a loan of any kind. During these months, you can set your finances straight, make timely payments on your existing loans, settle your monthly bills on time and move the credit needle in the right direction.

At any stage, if you feel the debt you have is overwhelming and getting the better of you, do consider contacting the National Debtline (or any other reputed debt assistance organisation).

What To Look For In A Bad Credit Mortgage Broker?

Commercial Finance Network is one of the leading whole of market brokers in the UK. The features our products bring on board all conform to the highest industry standards and knowing about them will give you an idea about what you should look for in an ideal bad credit mortgage broker.

The Panel Of Lenders

Whole of market brokers can help you connect with a wider range of specialist lenders.

Track Record

An ideal adverse credit mortgage broker should have a satisfactory track record in terms of approval rates and industry reputation.


All brokers are required to let you know about the fees and commissions involved. A specially prepared document called the Key Facts Illustration (KFI) will detail the breakdown of fees and commissions, so that you – as a customer – can understand the deal better.

Bad Credit Shouldn’t Stall Your Dreams!

With a range of bad credit mortgage products and a panel of UK-wide specialist lenders, we make sure that every adverse credit mortgage application we receive is treated fairly.

To request a call back from one of our experts, call us on 03303 112 646. You can also submit your bad credit mortgage online.