Corporate Loans Remain Expensive and Elusive So What Now?
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All successful businesses have a need for corporate loans, from start-up, through to operations and onto expansion- credit is the lifeblood of the commercial sphere. Just how vital loans can be to the running of the modern business became all too apparent, with the advent of the credit crisis in 2008, when many enterprises were choked by a lack of available credit.
If you are looking to raise finance for your business, you need a firm grasp of the state of the corporate loans market, who the players are, and where loan rates are heading. And, given the current problems associated with realising corporate loans, you would be well advised to take a look at what your other options are.
Corporate loans are readily accessible from credit brokers- brokers have the advantage of being able to select loans from across the market, and to tailor the loan to your specific requirement. However, corporate loans arranged through credit brokers are liable to include fees for the broker, and the range of options available has been severely reduced since the credit crisis.
Principle lenders, that is say banks and other holders of capital available for loan, are better placed to offer you a good deal. But you will have to make a thorough investigation yourself to see what the best provider and loan packages are. You will also find the same dearth of affordable corporate loans that the credit brokers are experiencing.
This leads us to what the current state of the UK credit market is and how conditions will evolve. The Bank of England 'Trends in Lending' report for April 2010 actually shows an accelerated fall in overall business lending, with a drop of 7.9% in the three months to Feb 2010. As for corporate loan rates, the report states that:
"For smaller businesses, the Credit Conditions Survey indicated that spreads on lending had increased somewhat. Contacts of the Bank's network of Agents reported that spreads and fees appeared to have stabilised, albeit at high levels."
Rates remain expensive, because although the indicative yield of senior debt has fallen from 7% in 2009 to 5.75% now, those falls have ceased, and rates remain well above Libor, which has been 0.5% for most of the last year.
The terms of corporate loans remain onerous- borrowers are subject to stringent credit checks, and need to demonstrate ongoing viability of their business. Additionally most providers of corporate loans will insist that they be given first legal charge on a property, accompanied by guarantees by the directors of the borrowing firm.
Given that corporate loans remain difficult to arrange, expensive, and involve the imposition of strict conditions, what other options do you have for raising your finance? One option could be to avoid the costs of borrowing, and look into a sell and rent back arrangement.
SellMyCommercialProperty could be the partner you need here - we are a property investment company with access to substantial lines of finance. We can purchase your business premises, whilst allowing you security to continue trading, on a long term lease. We can make a valuation fast, and can quickly supply you with the finance you need. If you get in touch with SellMyCommercialProperty today, you can find out how much easier and cheaper your finance can be than any arranged through corporate loans.
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