There is a wide variation in the information required about a borrower depending on the lender involved, according to Adam Tyler, chief executive of the National Association of Commercial Finance Brokers (NACFB).
But Mr Tyler says the approach to any lender should include a full summary suitable for a credit department including analysis of audited accounts, business aspirations, and so on.
“The requirements are wide and varied from a basic set of CVs to three years of audited accounts including surveys not only of the buildings, but the stock and business itself.
“We have 93 business lenders and the only way that the best advice can be given to a customer through this myriad of lenders is through a professional NACFB commercial finance broker who has access, sometimes on an exclusive basis, to the commercial market place.
“Other forms of commercial finance need to be considered in the overall recommendation, so further particular knowledge is required.”
A curriculum vitae (CV) or summary of the borrower’s background is required by most commercial mortgage lenders, according to Steve Olejnik, sales director of Sevenoaks-based intermediary Mortgages for Business.
Identification, proof of address, proof of income and bank statements will need to be supplied, but Mr Olejnik says lenders also like to see experience relevant to the application.
“For start-up businesses, lenders require a robust business plan including cash flow forecasts/projections, market research, profiles of the key stakeholders and management team and financial statements for the applicants (assets and liabilities, income, expenditure, etc.).
“Trading businesses will need to provide the last two to three years’ accounts along with full details of the individual’s personal financial position.”
Property investors will also need to provide a schedule of existing properties, copies of the tenancy agreements, licences and exit strategy especially if borrowing on an interest-only basis, Mr Olejnik says.
Full details of the property including any historic valuation reports, sales particulars for new purchases, and buildings insurance will also have to be supplied, according to Mr Olejnik.
“Brokers should gain a full understanding of the lending criteria of all the main commercial lenders.
“Building strong relationships with lenders is also very important. They should take the time to get to know the key decision makers, underwriters and processing staff.
“Many of the niche lenders and challenger banks can only be accessed via restricted panels of intermediaries. Brokers who can’t get on the panel should align themselves with larger specialist brokers who have a better reach.
“Brokers should also look to gain experience in reading financial accounts, understanding business plans, and learning about different sectors (for example, leisure, retail, business, industry, care, medical and professional).”
Rob Lankey, managing director of commercial mortgages at Aldermore Bank, says his company requires three full years of audited or certified accounts, sometimes supported by current management figures, two months of bank statements, plus a statement of assets and liabilities.
For business purchases and capital-raising, Mr Lankey says Aldermore may ask for cashflow projections and business plans.
If the client is an employee, Mr Lankey says it will ask for the last three months of payslips and latest P60 or SA302 returns for self-employed persons.
Mr Lankey says: “It is normal to provide more information than for a residential mortgage because the lender wants to make sure you know what you’re entering in to and can afford it, not just now but when inevitably interest rates rise in years to come.”
To make sure you obtain the best deal possible for your client, Mr Lankey recommends doing your research.
He says: “There are myriad options in the market and the bespoke nature of the commercial mortgage product means a mortgage solution should be tailored to the client and their specific circumstances.
“Having done that research, we strongly recommend picking the phone up and talking to the lenders of choice as the variety and complexities of the possible loan options can never be fully expressed online.”
