How do banks grant commercial property bonds?
A commercial property is one that is legally zoned to run a business from.
What does a bank consider as a commercial property?
A commercial property is one that is legally zoned to run a business from it, which is authorised to do so by the local authority under whose jurisdiction the property falls. First National Bank, for example, will under normal circumstances, gear a property to a level between 90% and 75%, provided the borrower conducts transactional banking with them.
How long does the approval process take?
Generally if all required information is available a decision (subject to valuation) is given within seven working days.
What loan term can I repay the loan over?
Anywhere between 10-20 years.
What security will a Bank typically require?
The Bank will require a primary bond over the property concerned, supported by suretyships and cessions of leases where applicable. (A cession of a lease by a Lessee involves the transfer of the Lessee’s rights to a third party who is then entitled the same rights, for instance, to occupy the property.
Other Options
Depending on the type of business you are setting up, the traditional way to raise money is to apply to a bank for a commercial property loan, but there are other options that you should consider. These options are offered by specialist financing companies and government organisations that help small and medium enterprises.
Business Partners Properties
Business Partners Properties owns, manages and develops properties throughout South Africa and offer rentals that are normally at market related levels for the areas where the properties are situated.
Khula Enterprise Finance
The dti (Department of Trade and Industry) recognises that support in the form of advice from specialist organisations is vital and the offer support groups to SME businesses. One such arm is Khula Enterprise Finance which is a wholesale finance institution that has well-developed ties in the public and private sectors.
Through these channels – which include commercial banks, retail financial institutions, specialist funds and joint ventures, they play an effective role in order to bridge finance gaps that are not addressed by commercial financial institutions in the small business sector.
Government grants
The government offers grants for land, however, there are specific requirements depending the type of business you intend to operate on the land.
