A commercial loan funds business premises, property investment, equipment or growth. The key difference from a residential mortgage is how it is assessed: lenders look at the business, the asset and your experience rather than a salary multiple. Deposits are typically 25–40%, decisions take longer, and most lending to limited companies will require a personal guarantee.
This guide covers the six main types, how lenders decide, what you will need, and the things that most often derail an application. If you already know what you need, our commercial finance page sets out how we arrange lending from £25,000 to £10 million.
Most commercial lending is not regulated by the Financial Conduct Authority. That changes the protections available to you, and we will tell you clearly where your case sits.
Finance used by a business or investor to fund:
Unlike a residential mortgage, the assessment rests on the strength of the business, the asset being financed and the borrower's track record. Most commercial lending is secured against property or other business assets, though unsecured options exist for smaller amounts.
For buying or refinancing premises — offices, warehouses, retail units, mixed-use. Available both to owner-occupiers using the building themselves and to investors letting it out. Lenders price these two quite differently, so be clear which you are from the start.
A commercial mortgage for landlords operating through a company rather than personally. Our buy-to-let page covers the wider picture.
Short-term finance for fast purchases, auction buys or refurbishment — where speed matters more than cost, and where there is a clear exit. Our guide to when bridging is your best option goes through the risks properly.
For ground-up construction or major refurbishment, released in stages as the project reaches agreed points so you only pay interest on what you have drawn. Lenders will want to see the development appraisal and your experience of comparable projects.
For business-critical equipment, machinery or vehicles, secured against the asset itself rather than property.
Smaller, shorter-term lending based on turnover and creditworthiness rather than security. Faster to arrange, and priced accordingly.
Criteria vary considerably between lenders, but most want a credible plan, trading history where it applies, suitable security and evidence that the borrowing is affordable.
Residential lending runs largely on income multiples and automated scoring. Commercial lending is underwritten by people, case by case, weighing:
This is why two businesses with identical accounts can get very different answers. It is also why presenting the case properly matters more here than on a residential application.
Most commercial lending to a limited company will require a personal guarantee from the directors. That means if the company cannot repay, the lender can pursue you personally — the limited liability that protects you in trading does not extend to the guaranteed debt.
Points worth understanding before you sign:
This is not a reason to avoid commercial borrowing. It is a reason to know exactly what you are agreeing to.
If you are self-employed or draw income through a company, how that income is presented matters here too.
Commercial cases are quoted individually, because they vary too much for a standard fee to mean anything. We work out what your case involves and agree the figure with you in writing before any work begins. Our full fee structure is published here.
What can a commercial loan be used for?
Buying or refinancing property, growing a business, investing in assets, covering short-term cash flow, or funding development.
How much deposit do I need for a commercial mortgage?
Usually 25% to 40% of the property value, depending on the asset and the risk.
Can I get a commercial loan with bad credit?
Often yes, though the choice of lender narrows. Specialist lenders may still lend based on the strength of the security or the business.
How long does it take?
Commercial mortgages typically take four to eight weeks. Bridging or short-term commercial lending can complete in seven to 21 days.
Are commercial rates higher than residential?
Yes. The lending is higher risk, the cases are more complex, and the underwriting is manual rather than automated.
Will I have to give a personal guarantee?
Usually, if you are borrowing through a limited company. Whether it is capped or unlimited, and whether it is joint and several, varies by lender and is sometimes negotiable.
Is commercial lending regulated?
Mostly not. Commercial mortgages and most buy-to-let and bridging are outside Financial Conduct Authority regulation, which changes the protections available to you. We will tell you clearly which applies to your case.
We are an independent, whole-of-market broker at Beehive Works in Sheffield, authorised and regulated by the Financial Conduct Authority (FRN 650114). On commercial cases we compare high street banks, challenger lenders and specialist funders, and we will tell you honestly when a deal does not work.
For commercial mortgages, development finance and asset finance, see our commercial finance page. You may also want our bridging finance page, or to read about our Sheffield advice.
Your initial consultations and discussions with your adviser are free, and our fees are set out in full before you commit to anything.
Call 0114 303 1031, email info@friendscapital.co.uk, or get in touch through the website.
Most commercial lending is not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Think carefully before giving a personal guarantee.