In the realm of commercial property investment, there exists a game-changing financial product that many entrepreneurs and property investors are yet to fully grasp. Today, we will delve into the intricacies of a remarkable offering that has the power to transform the landscape for businesses with substantial goodwill, a concept often overlooked by mainstream lenders.

Understanding the Significance of Goodwill

Goodwill, in a business context, refers to the intangible value attributed to a company due to its reputation, customer base, and overall standing in the market. Also it’s profits. Traditional lending institutions usually disregard this element when evaluating a property’s worth. However, there are scenarios where businesses possess significant goodwill, elevating their overall value. Imagine acquiring a corner shop for £300,000, with an additional £100,000 in goodwill. Typically, lenders would only consider the property’s physical value. But what if you could borrow against both the property and its goodwill, effectively increasing your borrowing potential?

Real-World Scenarios

Consider a thriving restaurant valued at £400,000, with a goodwill value of £200,000 due to its exceptional success and income generating capability. Instead of borrowing against the standard £400,000, this innovative financing solution allows borrowing against the combined value of £600,000. At a standard 75% loan-to-value ratio, this translates to an additional £150,000 in borrowing capacity. The impact on investment properties is equally remarkable. Even a vacant property with a strong lease can significantly benefit from this approach. While most lenders evaluate based on vacant possession, this unique solution recognises the income-generating potential of leases, often leading to higher valuations.

Unveiling the Game-Changing Lender

Recently, a pioneering lender emerged, recognizing the value of goodwill in commercial properties. Unlike traditional lenders, this institution incorporates goodwill into its assessments. An enlightening example showcases a property valued at £490,000, with £265,000 attributed to goodwill. Conventional lenders offered £168,000, reflecting 75% of the bricks and mortar value. In contrast, this innovative lender extended a staggering £343,000, nearly double the amount, at a lower interest rate. This substantial financial boost, coupled with reduced interest rates, underscores the immense potential of this financing avenue.

The Unique Advantages of Goodwill

What makes this product truly extraordinary is its affordability calculations, competitive interest rates, and, most importantly, the ability to secure significantly higher amounts of funding. Affordability and loan-to-value considerations align favorably for borrowers, resulting in more substantial financial support. In essence, borrowers require a far lower deposit, making ambitious property investments within reach or cover additional costs such as stamp duty.

Embracing the Future of Commercial Property Financing

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Whole-of-Market Guidance for Borrow Against Goodwill

Securing competitive terms on borrow against goodwill requires expert underwriting knowledge. In addition, our specialist broker team works directly with over 90 specialist lenders across the UK.

Consequently, reviewing your borrow against goodwill options with an FCA-authorised specialist credit broker ensures whole-of-market access while avoiding unnecessary fees and delays.