Finance broker
Commercial loans secured on property and business assets
A commercial loan is business-purpose finance, usually secured on commercial or mixed-use property or other business assets. It can be used to raise capital, refinance debt or fund expansion, and we help structure the case around the security, the purpose and a credible exit.
- Typical LTV
- Often 60% to 75% of the property value, sometimes higher with specialist lenders.
- Loan terms
- Short-term facilities often run 6 to 36 months; commercial mortgages run much longer.
- Interest options
- Interest can be paid monthly, retained at the outset or rolled up to exit.
- Exit strategy
- Lenders expect a credible repayment plan, such as refinance, sale or trading income.
On this page
Commercial loans are funding solutions designed for businesses that need finance for growth, restructuring, capital raising, expansion, or asset-backed borrowing. They are often used where the business needs a larger or more structured facility than a standard unsecured loan can provide.
This type of funding can suit established businesses, company directors, investors, and commercial operators looking for practical finance backed by business strength or property assets.
The right structure depends on the borrowing purpose, the available security, and how the loan will support the wider commercial objective.
Ready to explore your commercial lending options? Contact Platinum Property Finance Experts today for a no-obligation consultation and receive your tailored funding quote within 48 hours.
What Is a Commercial Loan?
A commercial loan is finance arranged for business use rather than personal borrowing. It may be used to support expansion, refinance existing debt, raise working capital, acquire assets, or strengthen the overall position of a business through secured borrowing.
In many cases, commercial loans are linked to business assets or commercial property security. That is what makes them different from more general business finance, where the focus is often on turnover, cash flow, or shorter-term operational borrowing.
Regulated vs. Unregulated Commercial Lending
An important distinction for any UK borrower is whether a facility is regulated or unregulated:
| Regulated | Unregulated | |
|---|---|---|
| Borrower type | Individual / sole trader | Limited company / SPV |
| FCA oversight | Yes, FSMA 2000 applies | No |
| Consumer protections | Key Facts Illustration (KFI), 7-day reflection period | Not required |
| Lender pool | Mainstream and specialist | Full market including private credit |
| Typical use | Personal security, some HNW cases | Business borrowing, property investment |
Most commercial loans advanced to limited companies for business purposes are unregulated; which widens the lender pool considerably and enables faster, more flexible deal structures.
Key Commercial Loan Parameters at a Glance
- Loan-to-Value (LTV): Typically 60–75%; up to 80% with specialist lenders
- Interest rates: 6.5–10% per annum (all-in), priced as a margin above SONIA or Bank of England base rate
- Loan terms: 6–36 months (short-term); 3–25 years (commercial mortgage)
- Arrangement fees: 1–2% of gross loan
- Exit fees: 0.5–1% where applicable
- Interest options: Monthly serviced or rolled-up (deferred to exit)
Who Uses Commercial Finance?
Commercial finance is used by business owners, entrepreneurs, limited companies, investors, and firms with complex funding needs. It can suit businesses looking to grow, restructure, refinance existing borrowing, or raise capital against an owned commercial asset.
It is also commonly used where a business has value tied up in property or wants to secure funding at a level that is not realistic through unsecured borrowing alone.
The stronger the asset and the business purpose, the more scope there may be for tailored lending options.
Typical Borrower Profiles
- SME directors raising capital against a freehold commercial unit they own
- Property investors refinancing a mixed-use or commercial block
- High-net-worth individuals unlocking equity from a buy-to-let or commercial portfolio
- Entrepreneurs restructuring debt ahead of a business sale or acquisition
- Developers funding a commercial conversion or mixed-use scheme
In every case, lenders assess both the borrower’s covenant and the quality of the security. A clear, documented exit strategy; whether that is refinance to a long-term mortgage, asset sale, or trading income, is non-negotiable. Without it, even a well-secured application may be declined or priced punitively.
Types of Commercial Loans
Commercial loans can cover a wide range of business funding needs. Some are used for asset-backed borrowing, some are secured against commercial or mixed-use property, and some are arranged to release capital from an existing commercial asset to support trading or expansion.
If the purpose is business borrowing backed by commercial strength, this is where it belongs.
Main Loan Structures Available in the UK
| Loan Type | Typical Term | Interest Structure | Best Suited For |
|---|---|---|---|
| Short-term commercial loan | 6–36 months | Rolled-up or serviced | Capital raising, bridging, acquisitions |
| Commercial mortgage | 3–25 years | Capital repayment or interest-only | Long-term owner-occupier or investment |
| Property-backed business loan | 12–60 months | Serviced monthly | Expansion, refinance, working capital |
| Revolving credit facility | Ongoing | Interest on drawn balance | Flexible, ongoing operational funding |
Rolled-up interest is a popular feature on shorter-term facilities: monthly payments are deferred and added to the outstanding balance, preserving cashflow during the loan term.
This suits property developers or businesses in transition, but borrowers should model the compounding effect carefully over terms beyond twelve months.
Property-Backed Commercial Loans
One of the most common types of commercial finance is a property-backed commercial loan. This is where a business or borrower raises funds using commercial or mixed-use property as security.
These structures can offer access to higher borrowing levels and more flexibility than unsecured funding, especially where the property asset is strong and the reason for borrowing is clearly justified.
Businesses looking to raise finance against existing assets can explore Property-Backed Commercial Loans to understand how commercial property security may support larger borrowing requirements.
How Lenders Assess Commercial Property Security
When advancing funds against commercial property, a lender will instruct a RICS-qualified surveyor to produce a Red Book valuation. This establishes two figures:
- Open Market Value (OMV): What the property would sell for on the open market
- 180-Day Restricted Realisation Price (RRP): A forced-sale value over a compressed timeframe
Lenders typically base their LTV calculation on the lower of the two figures; meaning borrowers on complex or niche assets should factor this into their expectations.
Additional underwriting considerations include:
- Tenure: Freehold commands higher LTVs than leasehold; short unexpired leases (under 70 years) can restrict lender appetite significantly
- Asset type: Office, industrial, and retail all carry different risk weightings; mixed-use may blend residential and commercial comparable evidence
- First vs. second charge: First-charge security is standard; second-charge commercial lending is available from specialist lenders but at higher rates
- Marketability: A property in a recognised commercial location with strong occupier demand will underwrite more favourably than a rural or single-let asset
A Realistic Working Example
Illustrative figures only. Actual rates, fees and loan amounts depend on the lender and your circumstances.
To illustrate how a commercial property-backed loan might be structured, consider the following scenario.
The Situation: A limited company director owns a freehold commercial unit in the West Midlands valued at £850,000. The business wants to raise capital to expand into new premises, without selling the existing asset.
Loan Structure Breakdown
| Item | Detail | Amount |
|---|---|---|
| Security | Freehold commercial unit (West Midlands) | OMV: £850,000 |
| Loan-to-Value | 70% | n/a |
| Gross Loan Amount | £595,000 | |
| Interest Rate | 7.5% p.a., interest-only, rolled-up | n/a |
| Loan Term | 18 months | n/a |
| Arrangement Fee | 1.5% of gross loan | £8,925 |
| Legal & Valuation Fees | Estimated | £4,500 |
| Broker Fee | 1% of gross loan | £5,950 |
Cost Calculation
| Interest accrued (£595,000 × 7.5% × 1.5 yrs) | £66,937 |
| Total repayable at exit | £661,937 |
| Gross loan | £595,000 |
| Less: arrangement fee | −£8,925 |
| Less: legal & valuation | −£4,500 |
| Less: broker fee | −£5,950 |
| Net funds in hand | £575,625 |
Exit Strategy
At the 18-month term end, the business plans to refinance onto a long-term commercial mortgage. For that exit to be viable:
- The property must still support 60–65% LTV on a standard commercial mortgage
- The business must evidence sufficient trading income to service the ongoing debt
- No Stamp Duty Land Tax (SDLT) is payable here as this is a remortgage, but borrowers acquiring a property with loan proceeds must factor SDLT into the gross funding requirement from day one
How Commercial Loan Funding Works
A lender will normally assess the borrowing purpose, the strength of the business, the nature of the security, and the ability to repay. If property is involved, the lender will also consider asset value, type, marketability, and how it supports the requested loan.
The case is then structured around the commercial objective. In some situations, the focus is expansion. In others, it may be debt consolidation, capital raising, or a more efficient long-term borrowing solution.
The Step-by-Step Application Process
- Broker fact-find: Your broker gathers details on the business entity (Companies House registration, filed accounts, director profiles), proposed security, and purpose of funds
- Credit assessment: Searches conducted on both the business and any personal guarantors
- Decision in Principle (DIP): Heads of terms obtained from the preferred lender, confirming indicative loan amount, rate, fees, and conditions
- Formal application: Submitted with the full documentation pack (see FAQ below)
- Valuation instructed: Lender instructs RICS surveyor; Red Book report produced
- Legal due diligence: Lender’s solicitors conduct title checks; borrower’s solicitors review loan documentation
- Credit decision: Typically 5–10 working days from a complete pack
- Completion: Funds released; most straightforward cases complete within 4–6 weeks
Call us or submit your enquiry online. We respond within 48 hours.
Commercial Loans UK
That page looks more closely at UK-wide borrowing needs, case structure, and how we help businesses across the country access tailored commercial finance.
Why Choose Us for Commercial Loans?
We take a clear and commercially focused approach to business finance. Our role is to understand why the funding is needed, explain the realistic options, and help you approach lenders with a properly structured case.
Commercial borrowing is rarely one-size-fits-all. We focus on practical lending routes that suit the purpose of the loan, the available security, and the broader needs of the business.
What Sets Platinum Apart
- Complex case specialists: short trading history, adverse credit, non-standard security, leasehold complications
- Transparent fees: no hidden charges; broker fee confirmed upfront before any work begins
- No obligation: initial consultation is free; you decide whether to proceed
- Speed: most DIPs returned within 24–48 hours; completions in 4–6 weeks for clean cases