Opening New Premises: Funding Options to Consider

funding options

Relocating to new premises (or opening premises for the first time) is not always about growth or expansion. There are countless reasons why a business may need to consider relocation, including but not limited to the following:

  • Growth – a growing business may call for larger premises, in order to accommodate its requirements.
  • New Markets – it could also be that a business plans to target an entirely new market, or to expand into multiple markets.
  • Cost Reductions – where operating costs begin eating into profits, downsizing to smaller premises can reduce outgoings.
  • Consolidation – a business with multiple separate offices may decide to consolidate its operations into one centralised hub.
  • Lease Expiry – it could also simply be that the lease on a business property is expiring, and cannot be renewed.

In each of the above instances, the business concerned faces the prospect of potentially heavy outgoings. Even when downsizing from larger premises already owned, the business may need to sell its current commercial property before being able to relocate.

Should any delays or disruptions be encountered along the way, the company’s plans may need to be put on hold indefinitely.

What Options Are Available to Fund the Purchase or Lease of Premises?

More often than not, businesses looking to purchase or lease new premises face time constraints. They need to execute the transition as quickly as possible, in order to keep their operations running smoothly.

This is where most conventional High Street loans fall short of the mark,  particularly when it comes to mainstream mortgages and similar property loans, which can take weeks (if not months) to underwrite and arrange.

Elsewhere, specialist independent lenders adopt a more flexible and accelerated approach to business borrowing. Just a few of the options worth considering where time is a factor are as follows:

Business Cash Advances

Also known as a merchant cash advance, a business cash advance enables an SME to borrow against future credit and debit card takings. A sum of money is issued in the form of a flexible and affordable loan, which is then repaid gradually as a set percentage of subsequent credit card payments (usually 10% to 20%). This can be great for maximising cash flow efficiency, enabling SMEs to plan and conduct ambitious projects with confidence.

Bridging Finance

A bridging loan could be the ideal solution for businesses that own premises and are looking to relocate. With bridging finance, you can use the equity you have in your current property to purchase your next place of business, prior to selling your existing premises. A loan is secured against the equity you have in your current commercial property, the funds can be used to purchase your new premises and the loan is repaid in full (plus interest) when your previous property sells.

Business Grants

Some businesses (depending on the sector, size, and type of work carried out) may be able to qualify for business grants or bursaries. Check the latest UK Government advice on business grants to see if your business is eligible.

Invoice Financing

A good way to maximise cash flow efficiency is to consider invoice financing.  This is where specialist providers allow businesses to access up to 90% of the value of pending invoices, often within 24 hours of an invoice being raised. If you routinely have to wait weeks or even months for customers to settle their debts, invoice financing could be ideal for your business.

Commercial Loans

A specialist-secured commercial loan could help fund the opening of your new business premises, with flexible terms and conditions to suit your exact requirements. Arranged with a specialist independent lender, a commercial loan can be set up to reflect the unique needs and financial circumstances of your organisation. If you have assets of value that could be used as security for a commercial loan, it is a flexible and affordable option to consider.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.