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Tips for making a commercial mortgage application

23rd Jan 2024
Brought to you by
Allica Bank logo
Allica Bank is Britain’s award-winning business bank focused exclusively on supporting established...
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Commercial mortgage applications can be frustrating and arduous process at the best of times. But – whether they’re finally getting their hands on the keys of a new premises, securing their future in their existing home, or purchasing an investment property to help build resilience in their business – the payoff for your client can be huge.  

Commercial mortgage
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The support of their accountant at such a time can be invaluable. That’s why Allica Bank’s Head of Business Management Gareth Anderson put together an in-depth guide for how to navigate and make the commercial mortgage application process as smooth and speedy as possible. Gareth gets under the bonnet of how each part of process works, all the way from finding a provider, to the valuation and legal bits, to drawing down the loan itself. 

We encourage you to read the full article. However, here’s a taster of his key takeaways about making that initial application. 

Making a commercial mortgage application 

So, your client or you have found a provider, and perhaps even have a decision-in-principle. Now for the application itself. 

The golden rule here is to prepare and share as much as possible, and then a bit more. 

If your client has this information ready before they reach this stage, it means the bank can get to work straight away on making a decision. And, more than that, by providing as much information as possible they’ll be less likely to come back asking for more information. 

Some of the key information to have ready includes: 

  • Business details (e.g. age, ownership structure, and directors’ details). 
  • Your client’s sector and place within it. 
  • Basic trading information (e.g. Profit & Loss, Balance Sheet, and Assets & Liabilities). 
  • Bank statements and completed accounts. 
  • An explanation of why they’re applying and how the purchase fits in with where they are now and where they want to be in the future. 
  • Your client’s business plan 

Speaking from a lender’s perspective, this information helps us create a picture of a business, its owners and key individuals, the risks it faces, their management structure, and their ability to service the debt. 

The more context we have, the more confidence we’ll have in our ability to make a reasonable prediction for the future and whether your client can keep up the repayments. Past performance can never predict the future, but it can serve as a decent yardstick when taken with the added context of a business plan, structure, and in-year performance. 

Key tips for accountants 

  • If you know your client intends to apply for a commercial mortgage, make sure their records are in order and easy to locate.  
  • Ensure that all certifications, stamps, or signatures are present on the documents. 
  • If you’re aware of, say, a period of low sales, speak to your client about it and prepare a plan for how to contextualise the situation. The worst thing you can do is try to sweep ‘negative’ information under the carpet. A lender will appreciate the context and that may be enough on its own to assuage their concern. 
  • Don’t just focus on the hard numbers. Inputs (management decisions) are just as important as outputs (financial performance) when assessing a potential borrower. Help your client paint a full picture of the business — that includes people. 
  • Share a full picture, not a rose-tinted one. Lenders don’t want to see perfection, they want to see accuracy. Pretending aa business is doing better than they are may end up harming their application rather than helping it. 

After some more detail? 

If you’re interested in diving a little deeper into the topic of commercial mortgages and helping make the process smoother and quicker, read our guide to commercial mortgage applications and tips and tricks for a quick decision

Otherwise, one of our relationship managers would also be happy to talk to you about how Allica Bank might be able to help your client. 

Get in touch with us