Decision in Principle Form
Commercial Finance
Commercial finance is a specialised and ever changing market, with lenders changing criteria regularly and, in recent times, stopping lending all together. It is difficult to keep on top of these changes, and as an advisor it is tempting to not ask the question " what do you do with your commercial finance". With Knock Knock Solutions you do not have to be afraid of asking for the business, as we will deal with the client direct. We have a team of Commercial specialists who have extensive experience in this market place, with support and back up from a broad panel of lenders to make sure your client gets a good deal.
As we are in contact with lenders on a daily basis, we know who has the appetites for which sector, so we can place your deal quickly and efficiently. We also appreciate the value of a quick "no", allowing your client to move on to explore other opportunities.
At Knock Knock Solutions we feel the role of the packager is incredibly important. In the commercial market place it is how the deal is presented, and the relationship with the individual making the decision that can often prove the key in getting a better deal.
Sectors
Our lenders cater for many sectors including;
- Agriculture
- Retail
- Property portfolios
- Healthcare/Care homes
- Leisure
- Offices
- Industrial
- Professionals
- Development finance
Clients
The type of client is equally as varied. Our lenders will range from
Prime
- Strong accounts are available.
- The client has previous sector experience.
- The clients personal and business accounts are run in a satisfactory fashion.
- The client has excellent credit standing.
- A clear, well-structured Business plan has been prepared
This type of deal will range upwards from of 1% above base rate, with loan to values of around 75-80% dependant on security offered. With additional security 100% funding may be available.
Near prime
- For the above clients that have perhaps missed a payment on a bank statement or a small satisfied CCJ with a good explanation.
- Some lenders will not require sight of bank statements or a business plan.
- This type of deal will range upwards from 1.75% above bank base dependant on the lender. The client may be required to provide a larger deposit or additional security to give the lender comfort.
All-Status
All status commercial loans are available, but are based more on the saleability of the security, than the client’s track record. Bank statements and business plans are seldom requested, and the client can have unlimited adverse with some lenders. However, the client can expect higher rates and fees, and will need a considerably larger deposit than with prime lending. Expect rates upwards of 10%, and loan to values restricted to 60-70%.
Development finance
Development finance falls into two catagories. The high street deals for the experienced developer, with good credit and funds to put into the deal .Alternatively, the less experienced developer, who may need up to 100% funding or perhaps has some adverse credit. For high street development deals, the client would be expected to put in around 25% of the purchase costs and 25% of the build costs. If the client does not have this deposit, there is the more expensive option of specialist developers, providing up to 100% of funding. However, the scheme would need to be strong with good profit margins to make this attractive to the lender with rates ranging from 1.75% above base to 4% over base. Some lenders will prefer to charge a monthly rate of around 1-3% per calendar month. To aid cashflow, Development finance is interest only, and the costs and fees are normally rolled-up into the loan amount.
Useful information to gather from the client for commercial deals
- The property particulars if buying.
- The old valuation if refinancing.
- 12 months mortgage history if refinancing.
- 6 months business bank statements (and 6 months personal bank statements if possible).
- Does the client have any adverse history? What, when and why?
- Always be clear on the repayment source, the lender will distinguish between owner occupied and investment properties.
- If a business plan is available – obtain a copy.
- What is the client’s background, is a CV available?
- On development finance, what are the projected costs and end values of the property?
Commissions and fees
We receive a procuration fee from the lender, which ranges from 0.5% to 1.5% of the loan advance. This fee will be split with the introducer 50/50.
In addition, a client fee will be charged at a minimum of 0.25% of the loan advance. This again will also be split 50/50 with you the introducer. The amount of client fee charged is decided between the introducer and underwriter on a case by case basis. This allows you flexibility in what your client is charged and what you will earn from the deal.