Retail Mortgages

If you’re relatively new to the prospect of buying property for a retail business, or don’t know the retail sector well, you’ll likely need some assistance getting a good deal. Below are some core tips for securing the commercial funding you’re looking for. You can also contact us directly with your specific queries concerning retail business mortgages.

• Research retail property deals. What’s the average purchase price of a retail facility in the area you’re considering? What does the average commercial mortgage involve? If you’re considering investing in an existing business, you can learn so much from looking at previous deals with similar circumstances. The more information you can uncover, the better prepared you’ll be when you proceed with your plan.
• Avoid relying on trends. Whenever a new trend appears, entrepreneurs make the mistake of committing incredibly early, putting them in dire straits when it dries up and leaves them running stores that shoppers no longer care about. Business premises need long-term viability, so focus on core products with evergreen (or at least predictable) demand. This will bolster your commercial valuations.
• Work on your credit history. Credit history can absolutely impact the terms of a commercial mortgage, as lenders will consider your history with personal loans when trying to determine your ability to meet monthly repayments. Do you have a track record indicating that you can be trusted with a business loan? Commercial investment mortgages don’t cover small sums, after all. They’re costly and come with significant expectations. 

The more you can polish your credit history, the better the terms you’ll be able to get on a business mortgage (with interest rates obviously being key). Getting your business loan secured with assets will help.

• Find a specialist broker to help you. When in doubt, it always makes sense to consult a commercial mortgage broker with experience dealing with retail premises. Our team of experts knows the industry very well. And since we’re not a lender, and are fully authorised and regulated by the Financial Conduct Authority (FCA), you can trust us.

The challenge involved in securing business loans for retail operations varies dramatically due to the breadth of the industry. Getting strong interest rates for stores providing much-needed products is obviously easier than doing the same for hyper-niche stores with unproven demand. Clear metrics and fair projections must inform every commercial loan application. How will the scoped business premises deliver steady returns? How significant are the risks?

Building a business plan that suggests realistic and sufficient growth is your main task. Lenders can be wary for understandable reasons: so many retail stores have closed following near-total failure, and no doubt their owners had big aspirations when they launched them. Think about how frequently the average retail unit changes hands or simply falls into disuse. It’s hard to believe (or even contend) that most commercial mortgages for retail stores work out well.

Business finance, then, operates downstream of smart planning. What will make your store different? How will you lean into the changes of the retail world instead of fighting against the inevitable shifts in demand? Answer these questions well, and you’ll be able to build on a solid foundation when you decide to seek commercial lending.

Certain types of retail businesses are particularly good performers. Let’s look at some of them:

• Post Offices. Building on their core services, Post Offices can provide complementary revenue streams to the advantage of their steady foot traffic. They can partner with delivery companies to offer click-and-collect options, for instance, or even host dry cleaning operations. Owners can launch their own side businesses or team with local companies to profit with fewer complications.
• Petrol stations. Food has become a big part of the petrol forecourt experience, with fuel stations bringing in big franchises (Costa, Subway, Starbucks, etc.) and leaning on familiar brands to further their profits. Another option is to move in a niche direction, concentrating on smaller stores (often run by local sellers) and specific product types with smaller numbers but higher profit margins.
• Garden centres. Due to the nature of their grounds, these businesses have huge room for growth, with expansive indoor and outdoor areas being perfect for hosting everything from concession stands to play centres. Such a site may be expensive, but it can absolutely be worth the investment if you can cultivate a suitable development plan.

In general, though, the universal relevance of retail means that any commercial property opportunity can have excellent prospects. It’s simply a matter of understanding exactly what you’re buying and knowing how to take full advantage of the resources at your disposal.