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Help your clients unlock the value of their business premises

Article provided by Fedgroup

For most entrepreneurs, their business premises hold a special place in their hearts. With your assistance, your business-owner clients can unlock the value in their business premises through a solution that is tailored to be just as entrepreneurial as they are.

When business owners make the decision to own their premises, it provides them with an appreciating asset. While commercial property is currently in a buyer’s market, a solid, well-maintained property in a good area continues to represent good value. Plus the security provided by property ownership is particularly important to business owners whose business model is completely reliant on that particular property.

There are also numerous other advantages to owning a commercial property. Most entrepreneurs who own property, do so through a separate company from the one that owns the business. This will allow them to one day sell the business while keeping the property, thereby earning a separate revenue stream from their property portfolio while they go on to create their next venture. The same approach would apply if the business outgrows its premises – the business owner could purchase a new, bigger building and keep the smaller one to generate an income with new tenants.

After the first property is paid off, they also have an option of bonding that property for a new one and build out their portfolio in that manner. 

In addition, the tax benefits are substantial. If the property is owned in a property company, the company that owns the business would pay rent to the property company, which then becomes a taxable deduction. In addition, the building loan is tax deductible for the property company. For many businesses, this form of ownership is considerably more beneficial than continuing to rent their premises.

What is keeping business owners from acquiring property in the current market is therefore not the long-term financial prospects of such an asset, but the red tape associated with acquiring a commercial property loan.

When the business requires their complete attention, there isn’t time for the lengthy, onerous and often distracting exercise of jumping through all the hoops of a loan application.

Recognising the effect that this status quo has had on the market, Fedgroup designed Commercial Property Finance to be flexible and responsive to the entrepreneurial mindset. Within 48 hours of the first meeting with your client, Fedgroup will provide a decision in principle regarding the property loan.

Because Fedgroup has been extending commercial property loans for over 30 years, it possesses industry experience second to none. This means that potential property owners, as well as the premises they wish to own, can quickly and accurately be assessed, as is evident from the very low default rate in Fedgroup’s bond book.

Because of this track record, Fedgroup is confident in its borrowers to the extent that up to 75%  loan to value of the property is extended.

Yet another area of flexibility that is virtually unheard of in the country is that property owners have the option of only servicing the debt portion of their loans, or if they choose, a flexible percentage of the capital amount. This option has proven particularly popular with entrepreneurs, as it puts more money back into their pockets every month that they can use to grow the business.

Even with billions of rands lent to commercial property owners over the last three decades, Fedgroup remains committed to never losing the personal touch. Fedgroup can meet with your clients over a cup of coffee to start the conversation about unlocking the value that exists in their business premises.

Fedgroup is a proud Partner of the NSBC