Finance Dispatch

It has been a tough few years for UK businesses. The credit crunch and the global financial crisis have made it almost impossible for companies to obtain commercial mortgages as banks have been reluctant to lend to SMEs. Loan to values have fallen significantly and there has been much publicity surrounding the banks various negative lending policies.

However, there are signs that the situation will improve significantly in 2011. The Government is expecting lenders to increase their lending in 2011 with some insiders hoping that commercial lending will rise by as much as 10 per cent in the next year.

So, if you have been putting off applying for a commercial mortgage, or you have found it tough to obtain the borrowing you need in the last few years, this could be the moment to look at it again.

There will be more money available to borrow for commercial mortgages: Finance News reports that Britains biggest banks are believed to be in discussion with the Treasury about disbursing business loans and commercial mortgages in excess of 200 billion pounds in 2011. The Government wants banks to lend more than they did in 2010 and the Chancellor is keen for there to be firm, verifiable lending commitments to businesses.

Many Opposition MPs are calling for sanctions if lenders fail to meet their commercial mortgage lending commitments; indeed Liberal Democrat Treasury spokesman Lord Oakeshott has said that "it would be total nonsense unless there are sanctions for failure".

So, whether there are sanctions for the bank failure to meet their business lending commitments or not, it is clear that the Government expects banks to lend more in 2011. This could benefit you through a relaxation of underwriting criteria, an increase in the loan to values available or improvements in the products offered to make them more appealing.

Expand your business as the economy recovers: With the British economy expected to improve in 2011, it is the perfect time to think of expansion. And, a commercial mortgage can help you raise the finance you need to expand your operations or to invest in new stock, machinery or premises.

For example, buying, rather than leasing, a property has many advantages and you can obtain a commercial mortgage to help you purchase new factory space. New offices, a new factory or a new warehouse may enable you to increase your staff levels, your turnover and your profits. The interest you pay on your commercial mortgage is normally tax deductible and you will own the property, making it a valuable asset to your business.

Historically low rates: Since March 2009, the Bank of England base rate has been at its record low level of half a per cent. Even if creeping inflation prompts an interest rate rise, experts predict that the base rate will stay low throughout this year. Consequently, it has never been a better time to take out a commercial mortgage.

Whilst the margin that lenders may be charging over the Base rate is higher than it was before the credit crunch, the actual rate you will pay on your business loan or commercial mortgage remains low. In addition, you may be able to negotiate excellent fixed interest rate terms with your bank considering that fixed rates are also at a historic low. Low interest rates on commercial mortgages will therefore making your monthly payments should be less of a worry in 2011.

About the Author:

This article was written by financial expert Howard O'Gollegos. Howard works for one of the UK's top Commercial Mortgage websites com who specialise in finding the best commercial mortgage rates for all its customers.

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