fathippy
20th May 2010, 08:40
Two part post here - first one is if any of you clever commercial mortgage brokers want to PM me, I am looking for a product to buy my shop!
Second part is a brief rant! I contacted an unnamed building society who seemed to offer the best commercial product and was fairly taken aback by the (what seemed) ridiculous rules they worked under. I am sure many of you will explain these to me, but I still cannot understand them!
1) They ignore any rent from the premises you purchase - ie if you are buying to replace paying rent, then you need to demonstrate alternate means of paying the interest (not just the money you save by not paying rent - even if this is 2 or more times as much as the interest). This seems to ignore a fairly important part of the equation - indeed if the buy to let market operated in this fashion it would cease to exist.
2) Not only do they require alternative means of funds but they also refuse to read accounts in a normal fashion. They are mandated by the FSA (allegedly) to ignore all non-cash items, so if a set of accounts shows profits of eg £50k and then allowances of eg £45k, they can only consider the 5k, even if there is cashflow of 50 !!
Maybe I had a particularly "box ticking" type experience, but if this is the sign of how small business is treated, then it is no wonder plenty are giving up. It seems that if you have a couple of questionable payslips and a dodgy one bedroom flat above a kebab shop (no proof of tenants or income yet) you can borrow freely (even these days) yet if you have had a business for 20 years with stable income, it is nigh on impossible to buy your own shop without paying about 50% yourself, a rate of 7%+ and guarantees, hoops etc up the ying yang. What is the social stigma here??
Rant over!
Second part is a brief rant! I contacted an unnamed building society who seemed to offer the best commercial product and was fairly taken aback by the (what seemed) ridiculous rules they worked under. I am sure many of you will explain these to me, but I still cannot understand them!
1) They ignore any rent from the premises you purchase - ie if you are buying to replace paying rent, then you need to demonstrate alternate means of paying the interest (not just the money you save by not paying rent - even if this is 2 or more times as much as the interest). This seems to ignore a fairly important part of the equation - indeed if the buy to let market operated in this fashion it would cease to exist.
2) Not only do they require alternative means of funds but they also refuse to read accounts in a normal fashion. They are mandated by the FSA (allegedly) to ignore all non-cash items, so if a set of accounts shows profits of eg £50k and then allowances of eg £45k, they can only consider the 5k, even if there is cashflow of 50 !!
Maybe I had a particularly "box ticking" type experience, but if this is the sign of how small business is treated, then it is no wonder plenty are giving up. It seems that if you have a couple of questionable payslips and a dodgy one bedroom flat above a kebab shop (no proof of tenants or income yet) you can borrow freely (even these days) yet if you have had a business for 20 years with stable income, it is nigh on impossible to buy your own shop without paying about 50% yourself, a rate of 7%+ and guarantees, hoops etc up the ying yang. What is the social stigma here??
Rant over!