Commercial Mortgage Loan Alternatives For Small Businesses

Obtaining commercial property loans and mortgages is becoming increasingly difficult as a result of increasingly restrictive lending requirements by traditional financial institutions. Due to this, numerous small businesses who are looking to purchase an office of their own, expand their current premises, or buy out another business, are turning to alternative lending options.

Commercial mortgage loan alternatives

Commercial property finance can be complex and difficult to understand, as each project may require a different form of funding. Here, we’re taking a looking at the commercial mortgage loan alternatives small businesses may consider in order to fund their latest project.

Property Development Finance

Short term property development finance can be sourced away from traditional financial institutions, often through P2P lenders, or brokers with access to exclusive lending facilities. It’s a a simple way to kick-start a development project, as funds can be sourced in this manner much more quickly than a traditional commercial mortgage loan. This is particularly helpful in the event that a property developer or business owner is looking to purchase a property through auction.

Generally, finance for an auction purchase is required upfront, and even if you don’t have the money, you may be able to obtain an ‘agreement in principle’. If you are undertaking a ground-up development, then property development finance is often the best option to consider.

Bridging Loans

Bridging loans are becoming an increasingly popular option for small businesses looking for an alternative to traditional financial institutions. Bridging loans can be secured quickly and efficiently, in most cases within a few weeks, and in some circumstances, within 24-48 hours.

The popularity of the bridging loan industry has grown significantly over the past 10 years (since the global recession in 2008), as a result of tightening lending criteria which is blocking many small businesses from obtaining their required funds from mainstream banks.

Bridging loans offer a convenient way to access the required funds for a commercial property purchase, as opposed to having to go through the long-winded process of obtaining a commercial mortgage.

Asset Financing & Invoice Financing

This is often used when businesses are facing a short-term cash flow problem, as opposed to those looking to mortgage an addition to their existing premises. Asset financing is the process of releasing funds which are tied up in their assets, whereas invoice finance is where funds are released within outstanding invoices. This can offer a much quicker way of obtaining a small amount of funds, if this is all that is required.

Merchant Cash Advance

Another short-term and small financial option for businesses to consider, is a merchant cash advance. Due to the way electronic payments can be tracked, quickly and easily, a merchant cash advance will see a company which processes all card transactions analyse a company’s recent sales and base a monetary advance off of this. The advance will also be structured in relation to what they predict your future credit & debit card sales might be. This is a solution which can be obtained exceptionally quickly, and the amount you are able to borrow is entirely dependent on the amount of cash you’re bringing in.

Repayments will be made as a percentage of the card sales which are made and will be deducted directly from the card account. These will be taken on a monthly basis until the debt is repaid. There is also no set figure, and pre-payment amounts will be agreed prior to obtaining the advance. While this is ideal for those struggling with cash-flow, if you are looking for a significant amount which you believe you will be able to pay back within 6-12 months on average, then you may want to consider this method to finance an auction purchase as part of your business expansion plans for example.


As you can see, there are a broad number of commercial mortgage loan alternatives on the market which you can discover. Business owners and property developers are able to opt for these variants in order to obtain finance quickly and complete their projects even faster.


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