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Guidelines to Retail Finance

Retail mortgages can be obtained for new or existing retail stores, shops, or shopping centers to finance a building or land for business use. Rates for these mortgages are usually at about 1% to 4% higher than the Bank of London Base Rate and can be obtained for about 70% of the total estimated value of the property. Should a good solid business plan be produced for the sake of the mortgage lenders evaluation, an even higher percentage may be lent to the applicant. A calculated 2 years trading figures must be presented by an existing business to be eligible for a higher percentage retail mortgage.

            Due to the increasingly powerful supermarket chains, the retail market has undergone some dramatic changes. However, the retail business should not be considered a lost cause. With recent findings showing the retail market in the UK having takings of around £250 billion from over 280,000 retail stores, entrepreneurs should not give up on their plans to open a small town shop, store, or shopping center.

Retail Mortgage Requirements

            To determine the eligibility of an applicant, lenders will look into the following factors when considering how much to lend:

  • Credit history of the applicant
  • Location and condition of the proposed property
  • How the road access and parking available will affect customers and suppliers
  • Whether there is any living accommodations in the business property
  • Sufficient customer demand


For shopping centers:

  • Whether location allows for a larger free parking lot
  • Whether location is close to any highways or junctions
  • Whether location provides a close suburban neighborhood for potential employees
  • If land price is low enough to allow retailers to provide a large stock of goods for lower prices.


Financial institutions offer retail mortgages for both franchised sales outlets and independent retail stores.

Changes in Retail

      With the takeover of the large supermarket chains and internet shopping, independent retail stores have been making needed changes in the way they do business to compensate for their lost customers to these retail giants.
            Smaller retail shops such as general stores or urban corner shops have turned to using a sub post office to generate more income. Since the larger supermarkets have even turned to taking over petrol filling stations, these once successful retail shops needed a new plan. Taking this option of adding a sub post office to their business can help business owners to pay for, or obtain mortgages. However, with this boom of new sub post offices, the Post Office has begun to limit the amount of contracted sub post offices it will allow, making it difficult for some to add this extra money maker to their business.

            Changes in the way people shop has affected the price of urban retail units. With more online shopping and suburban retail parks, the price of an urban retail unit has become more affordable to business owners and may be a good choice for some. However, a complete analysis of the location should be done before price is considered beneficial. If there are many empty retail units on the same street as the proposed retail property, chances are that there is not enough prospective customers in that area. This could change if there are any upcoming changes to road layouts or pedestrian crosswalks. A review of local council plans will help determine whether this is so. A plan that will increase traffic in the area of your business could dramatically increase the number of prospective customers.




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