Short-Term Specialist Bridging Finance can help businesses to cut wasted costs but also help business owners buy property

The economic challenges facing the UK have been well documented and, just as households will be looking at ways they can control their spending during the cost-of-living crisis, so too will businesses.

Controlling spending isn’t simply a case of cutting costs. Periods of financial pressure often provide an opportunity to review where money is being spent and to assess how it might be used more effectively with the help of short-term specialist bridging finance.

For those businesses that currently rent their premises, for example, the rental payments represent a significant wasted cost as the money goes to the landlord rather than an investment in an asset. With this in mind, there are a number of advantages for those businesses that are able to own the premises from which they operate.

For example, as the owner of the premises, a business will have much greater control over the configuration of the space. Unlike a tenant, a commercial property owner can modify the premises to suite their exact requirements, even applying for planning permission for more radical alterations. Commercial property leases often include clauses requiring the tenant to reinstate the space to its original configuration when the lease ends, which comes at a cost to the tenant and limits the changes that are realistically achievable.

At the same time, in an environment of increasing rents, commercial tenants are at the mercy of their landlord when the time comes to renegotiate their lease, and they may find they have to pay over the odds if they are not prepared to move their business to new premises. Buying the property from which a business operates gives the business owner greater control over the property costs. In some circumstances, buying may even be a cheaper option than renting, but that’s not always that important. The key consideration for most businesses is that they are spending on investing in their own asset, rather than making their landlord wealthier.

The good news is that there are opportunities for businesses to buy their premises, particularly in the current environment with the help of short-term specialist bridging finance . At Alternative Bridging Corporation, we regularly help small business owners to buy the premises from which they operate. We often speak to brokers who have become disillusioned by the long timeframes and inflexibility of the larger banks and are amazed by our can-do attitude and responsive service.

For example, we recently worked with the owner of an Indian restaurant who had an opportunity to purchase the freehold of the premises from which it operated as the landlord was looking to retire. At Alternative Bridging, we were able to provide a short-term loan to finance the purchase and also meant the businesses had cheaper monthly payments than it had previously been paying in rent. The business then refinanced onto a term loan when its accounts enabled it to do so, reducing its monthly payments still further.

Buying business premises is not for every SME owner, but in this time of rising costs and economic uncertainty, it can be an attractive option for some – providing greater control over their destiny and enabling investment in a capital asset. High street lenders may not always have the appetite for this type of business, but the specialist short-term bridge lending community is successfully helping business owners buy property and freeholds all the time – it’s an option worth discussing with your business clients.

Jonathan Rubins, Director at Alternative Bridging Corporation