Do you want to move for Leasehold business financing..? Might be possible you don’t have enough knowledge about that.
But one thing will never forget that there is a large community in the world that wishes to own a business as a career. Some of them achieve what they want. However, most of them can’t make a strong idea and fail to execute their plan.
If you are considered yourself in the category discussed later. So leasehold business grants you a great opportunity to fulfill your dreams. You will be amazed to see this. You no more worry now. Because this is not only a piece of writing, it’s a Nymphalidae that will help you to fly over the sky.
What is leasehold business financing?
A leasehold business generally considers a business in which a business owner grants his business on lease to a lessor. It involves a lease for building and land which the business operates on…
There are some terminologies in leasehold business, you have to understand them before indulging in it. Let’s move to get to know about them…
A person who owns an asset or any property and then allows someone to use it or opens the door of his house to dwell here comes in the context of Lessor. In contrast, he gets the rent periodically in return from that person or other party.
A person who uses an asset owned by a Leasor, not for always, rather for a specific time period by paying some periodic rents according to the terms and conditions generally refers to Lessee.
If you talk about the term – Lease, then it’s the amount that pays a lessee to the lessor in the form of rent.
Do you seek leasehold business in the UK?
Whether you are resident of the United Kingdom or not, you can run your leasehold business there. You will be wondered to see that the more popular Leasehold retail business has been rushed successfully in England and Wales – namely Giles Finance. You can finance the purchase of a business on lease in so many ways and for most types of commercial premises.
Not only this, rather it also arranges the fundings on a number of niche markets:
- Agricultural units
- Carehomes, Nurseries
- Corner Shops, Hotels, Guest houses, B&B’s, Holiday lets
- Industrial units, factories, offices, warehouses
- Newsagents, Fish, and Chip stores
- Pubs, Restaurants, Takeaway Units
- Specialist leisure (golf, country clubs etc…)
Some leading terms used in Leasehold Business
- Purchase or Refinance
- Maximum loan 50% of purchase price
- Minimum loan £50,000
But maximum loan term is a half unexpired lease or 60 months whichever lesser. Naked lease!
Usually we see most leasehold business owners who didn’t pay loan as per the deal. But here you will be satisfied with 100% loan facility. Because the leasehold business valuation report must indicate that the business can service the loan satisfactorily.
If you pay attention to the business policies of Giles Finance, you may come to know that this is an open platform for all leasehold business surveyors to inspect all retail businesses and carry out the valuations on residential properties which are offered as collateral security in transactions.
Merits of Leasehold Financing
Remember! Each coin has two sides. So, why not with the leasehold business. So, firstly some positive attributes have to be highlighted here. If you figure out some merits of great significance, you may get;
- It enables the lessee to acquire the asset with a lower investment.
- It provides finance without diluting the ownership or control of the business.
- Simple documentation makes it easier to finance assets.
- The lease agreement does not affect the debt-raising capacity of an enterprise.
- Lease rentals paid by the lessee are deductible for computing taxable profits.
- The risk of obsolescence is borne by the leaser. This allows greater flexibility for the lessee to replace the asset.
Demerits of Leasehold Financing
You will know that where positivity highlights at any place, negative aspects also present alongside. So, here are some limitations of leasehold business that are going to be discussed.
- A lease arrangement may impose certain restrictions on the use of assets.
- The normal business operations may be affected in case the lease is not renewed.
- It may result in a higher payout obligation in case the equipment is not found useful and the lease opts for premature termination of the lease agreement.
- The leasee never becomes the owner of the asset. It deprives him of the residual value of the asset.
As you consider the main crux of the whole article, you will come to know that if you compare the pros and cons of leasehold business financing. You must say Yes! It can be the best recourse to opt for.