One of the reasons commercial mortgages feel harder work than residential ones is the amount of information involved. Lenders are assessing a business and a building, not just an individual, so they ask for more.
Knowing what is likely to be requested, and when, makes the process much less daunting. This guide sets out what lenders typically want at each stage. Exact requirements vary between lenders, so treat this as a guide rather than a definitive list.
Stage one: the initial enquiry
At the outset, nobody expects a folder of documents. A broker or lender needs enough to understand the deal and decide whether it is something they can help with. That usually means:
- What you want to do: buy or refinance, occupy or let
- The property: type, location and approximate value or price
- How much you want to borrow and how much you can contribute
- Who the borrower will be: individual, partnership, trading company or SPV
- How long the business has been trading and roughly what it turns over, or the rent the property produces
- Where the deal is: still looking, offer made, or offer accepted
- When you need the finance in place
Approximate figures are fine at this stage. The point is to give a clear picture so the specialist can work out which lenders might be interested.
Stage two: the application
Once there is a lender in mind, the detail begins. Requirements differ, but the following are commonly requested.
About the business (owner-occupiers)
- Filed accounts, often for the last two or three years
- Up-to-date management accounts if the last filed accounts are more than a few months old
- Business bank statements, typically for several months
- Details of any existing borrowing and its repayment schedule
- A short business plan or explanation of how the premises will be used, particularly for newer businesses or where the move changes the business
About the tenants (investors)
- Copies of the leases
- A schedule showing each tenant, rent, lease start and end dates and any break clauses
- Information about the tenants' businesses, which helps the lender judge the quality of the income
- Rent payment history where available
About the borrower and guarantors
- Proof of identity and address for directors, shareholders and guarantors
- A personal asset and liability statement
- Personal bank statements in some cases
- Details of the company: incorporation documents, shareholders and directors
- Where an SPV is used, the proposed lease between the SPV and the trading business
About the property
- The address and title details
- Sale particulars or heads of terms for a purchase
- Any existing valuation or survey, although the lender will almost always commission its own
- Planning information, especially if the use is changing
- For properties needing work, a schedule of the intended works and costs
- An Energy Performance Certificate
About the deal
- Evidence of the deposit and where it has come from
- An explanation of the purpose of any additional borrowing in a refinance
- Details of your solicitor
Stage three: after the offer
Once a lender issues a formal offer, most of the remaining work is legal. Your solicitor and the lender's solicitor will deal with title, searches, the lease if there is one, and the security documents. You may be asked to sign a personal guarantee, for which independent legal advice is usually required, and to provide evidence of buildings insurance with the lender's interest noted.
Why lenders ask for so much
Every request maps to a risk the lender is trying to understand. Accounts and bank statements show whether the business can afford the loan. Leases show whether the rent is reliable. Identity documents satisfy anti-money-laundering rules. Deposit evidence confirms the money is yours and where it came from. Seen that way, the list is less arbitrary than it first appears.
Practical tips
- Get the accounts in order early. Out-of-date or incomplete accounts are one of the most common causes of delay.
- Be upfront about anything unusual. A dip in turnover, a previous credit issue or a short lease is better explained at the start than discovered later.
- Keep everything in one place. A shared folder with clearly named documents saves time for everyone.
- Ask what is needed before you send anything. Different lenders want different things; sending the wrong documents creates noise.
Where FundingFrame fits
FundingFrame's checker covers stage one only. We ask for the information needed to understand the deal (nothing to upload, no documents, no credit check) and structure it into a Deal Snapshot. Where appropriate, we introduce the snapshot to a specialist commercial finance broker, who will tell you exactly what a lender needs for the next stage.
Key points
- At enquiry stage, lenders and brokers need a clear picture of the deal, not documents.
- A full application typically involves accounts, bank statements, leases, identity documents and property details.
- Investors are asked about tenants and leases; owner-occupiers about the trading business.
- Guarantors will usually need to provide personal financial information and take legal advice.
- Requirements vary by lender: ask before you send.
- Getting accounts and paperwork organised early is the single biggest thing you can do to avoid delay.