A brighter future ahead for commercial businesses

In an article produced for Business Moneyfacts, we talk about how the last two years have impacted commercial businesses and how they can now start to see a brighter future ahead.

A state of flux. That’s the only way to describe the situation many commercial businesses found themselves in during the last two years.

According to data obtained by *Price Bailey, it was recorded that a record 14,526 businesses in the UK voluntarily appointed liquidators last year, with this marking a 7% increase on the previous record set in 2020 when 13,590 companies voluntarily appointed liquidators.

The pandemic has hit the hospitality and retail industries particularly hard. During the lockdown periods, pubs, cafes, restaurants and shops were forced to close or severely restrict the services they could provide. Even when they were open for business, they struggled to maintain income owing to many of the public being uncomfortable to mix in public spaces.

Therefore, it was no shock when **NACFB identified through their latest annual survey, that brokers recognised enquiries for commercial property investments as one of the main areas which plummeted in 2021. However, as we emerge from the pandemic and start to feel hopeful about the future, there now needs to be opportunities to enable businesses of all types to bounce back and thrive.

A common question we are asked by brokers is how can bridging finance help businesses? One of the main misconceptions about the specialist lending industry is that this type of finance is only suitable for residential property purchases. However, the reality is that bridging finance can be used for a range of opportunities which require immediate funding: from a temporary cash flow problem in a business or buying a property at auction – the list goes on.

A bridging loan is usually able to be arranged much more quickly than a mainstream loan, often in a number of days rather than weeks or months. Most bridging lenders can also be much more flexible as loans tend to be underwritten individually, meaning they can consider individual borrowers’ circumstances. It also means they can lend on those more complex cases which mainstream lenders often reject. This is key for investors and developers who are looking to make the most of commercial investment opportunities.

Although the specialist lending industry is notably increasing in popularity with brokers, there are still a few myths about bridging finance lingering, e.g. bridging is an expensive option and should therefore be seen as a last resort. Unfortunately, these misconceptions are at times responsible for putting brokers off looking at bridging as a solution for their clients.

Bridging finance is a highly competitive finance option, which can provide a much-needed solution in many situations, where another type of finance might not be able to. Compared to let’s say asset financing, with a bridging loan, a lot more money can be borrowed.

It also solely depends on why the borrower needs the loan in the first place, whether it’s for a business investment, cash flow purposes, a business expansion, to pay tax bills etc. Ultimately, it is very difficult to compare the various finance options available in the market, as they are completely different and used for different purposes.

However, one of the key advantages of a bridging loan, is that it can be completed much more quickly than in the mainstream lending market. This can make all the difference in terms of a property transaction going through or getting a property into a position where it can generate a return to the borrower much more quickly. In these cases, it may well end up being more cost-effective than waiting for a more typical type of borrowing from a mainstream lender.

With that in mind, I would encourage brokers who are new to bridging, or who may have pre-conceived perceptions about the sector, to learn more about it and consider it when looking for suitable options for their clients with commercial property investment enquiries.

Looking ahead, we predict there will be a growing amount of investors and developers turning to commercial investment opportunities this year. This seems to be the same opinion as the brokers who took part in the latest NACFB annual survey, with 16% of respondents anticipating commercial property investments as being the main growth area in 2022.

However, there is no denying that the last two years has not only drastically changed how we live, but also how we work and this could have long term consequences for the future of our high streets, cities etc.

Therefore, the type of businesses which will occupy our high streets, cities and so forth in the future is still uncertain. However, no matter the outcome, bridging loans provide the ideal solution for those who are looking to facilitate change of use projects (including converting a commercial site into residential property), light to heavy refurbishment plans and so forth.

Bridging finance can be a great means of support to help commercial businesses get back on their feet and is highly worth exploring as a broker who has a client who is needed to secure a temporary means of finance quickly and efficiently.

Ultimately, business owners more than ever need access to innovative, fast and tailored finance solutions, which can meet their needs and in turn, help the economy bounce back. A bridging loan fills this void which is why it should be considered as a leading option by brokers and borrowers.

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