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THE commercial finance market is predicted to boom as more SMEs look to get a foot on the business property ladder.

Latest Property Data statistics from 2005 show that annual investment in commercial property has doubled over five years, from £21bn to £50bn, and experts at independent commercial finance broker Moneygate, claim growth looks set to soar as the lending market becomes more flexible.

Currently the total UK commercial property market is valued at about £600bn (Bank of England lending returns) which is approximately 20% of the residential market value.

But the emergence of niche and specialist lenders and new commercial mortgages containing features that used to be only linked to the residential sector – such as low start, interest only, discounted and fixed rate mortgages – is tempting more businesses to buy their bricks and mortar.

Derek Kewley, head of commercial finance at Moneygate explained that as a result the commercial lending market now has more lenders and more packages to choose from than ever before – making for a very competitive environment.

But he urged businesses not to fall into the trap of just going to banks to fund their purchases and in doing so over-looking the expertise of specialist lenders who can make it easier and cheaper for business to find a mortgage.

Mr Fowley said: “According to Bank of England lending returns, there are nearly 48,000 commercial property transactions a year worth less than £1m.

“The middle and lower transactions are driving the market as lending becomes more flexible. New lenders are coming in now and bringing more flexible products to the market, and they are also being flexible about the type of people they will lend to.

“Traditionally SMEs would turn to the high street banks to make a foray into the property market but main banks have a regimented way of looking at things instead of putting together a bespoke package to suit the client and the property.

“Fortunately there are now more independent brokers offering independent advice on a wide range of products available to businesses no matter what the history.

“As a result the commercial lending market is more accessible than ever before – but the downside is that it can be very confusing and frustrating trying to choose the best loan deal for you and your particular circumstances if you attempt to do this yourself.

“Also many excellent commercial finance providers are not available to the general public but can be accessed through a broker.

“The combined effect of all of this is very significant – just look at what happened to the buy to let market in the 90s when lenders started to loan up to 85 per cent of a property’s value. Buyers no longer had to find the usual 30 per cent to put down and the market soared.”

In 2002 15 per cent of all commercial mortgages were arranged by brokers in the UK and this year that figure is expected to hit 20 per cent. An estimated £35bn (British Bankers Association) of this is loaned to SMEs.


For more information contact Andy Barker at Results Network on 0191 5197268 or 07855 3652303.

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