Reasons to be cheerful in reprise

With more mortgage options coming on to the market, businesses remortgaging may have a reason to be optimistic, as Joe McGrath discovers


In the days before the global credit crunch, the multitude of commercial mortgage options was staggering.

Small and medium-sized enterprises (SMEs) attempting to identify the most appropriate financing options were spoilt for choice, not just with lenders, but products too – with a variety of different rates on similar low-interest terms. However, that all changed when lenders packed up and left the market as their ability to package and sell on (securitise) these loans ceased.

A handful of high-street lenders continued to offer loans, which they kept on their own books, but there was a lot of hoop-jumping required as lenders were now scared to lend as the loan was going to be made from their own deposits. For SMEs, there is now thankfully better news.

In early 2011, Aldermore Commercial and Whiteaway Laidlaw Bank (now Shawbrook Bank) roared into the commercial mortgage market. And, as the options returned, so did the hunger from small-business owners.

There are some super deals out there for mainstream SMEs

These two were joined in 2012 by Interbay Commercial who returned with brand new owners and bag of cash, ready to lend. What followed was a slow trickle of new entrants, including Metro Bank, which is now beginning to cause a stir.

The result of these new market entrants is that SMEs are returning to intermediaries to help them shop around for the best products.  The commercial finance broker market had contracted considerably between 2007 and 2009, but it is now growing once more.

Tony Sutton is a commercial finance broker and managing director of Imagine Loans. “The leisure industry continues to suffer from a lack of competition in the market, mainly nightclubs, gymnasiums, casinos, sports clubs and holiday parks,” he says.

“Development finance can also be difficult with so many lenders concentrating on South-East England, and rates and terms in other areas often being set at 18 per cent per annum, with a percentage of the gross development value also taken.”

However, Mr Sutton says there are some super deals out there for SMEs operating in more mainstream sectors.

But the difficulty for SMEs is that lenders, both high-street and specialist, remain picky when agreeing customer loans. Yet, it does appear that the situation is improving and more lenders are predicting to enter the market later in 2013.