Mortgage for Businesses
When a person or company wants to finance the purchase or start-up of a business, there are different types of mortgages for companies, depending on the purpose or holder to which the mortgage loan is to be applied.
What types of mortgages for companies can be requested?
The choice will depend on the available assets, the legal form of the business, and the purpose of the loan. Let’s look at them.
Mortgage of a commercial premises
Designed for the purchase of a premises, shop, office, workshop, restaurant, or industrial unit among others, this type of business mortgage is the most common in newly established companies.
Who can apply for a mortgage to purchase a commercial property?
It can only be requested by natural persons with business activity (self-employed) or by legal entities (commercial companies), the difference between the two being that the natural person would be liable with their personal assets, whereas the legal entity would be liable with the entity's assets, and the partners' liability would be limited to the contribution they have made.
In the case of companies, it is very common for banks to request the administrators as guarantors or sureties, in which case they are liable with their personal assets if the company fails to pay.
What do banking institutions value?
In them, financial institutions assess the real guarantee (the appraisal value of the property on which the financing will be applied) and the buyer's payment capacity (their income and borrowing capacity).
How is the mortgage for a commercial premises formalised?
The loan is secured with the property itself and is formalised in a notary office for mortgages. In this case, it is essential that it specifies that the purpose of the property is professional or business-related and the type of natural or legal person in whose name it must be established.
What differences can there be between a commercial property mortgage and a residential mortgage?
Generally, the mortgage for commercial premises has:
- A higher interest rate: banks usually consider the risk of the operation to be greater.
- A lower financing percentage: in this case, it usually does not exceed 70% of the appraisal value or the property.
- A shorter mortgage repayment term: they usually do not exceed 20 years.
- The housing mortgage is subject to Law 5/2019 on Real Estate Credit, while those for premises would only be subject to this law if a natural person intervened as a consumer and not as a businessperson (for example, to guarantee).
Furthermore, it is the buyer who assumes the costs of notary, registration, management, appraisal, and taxes (IAJD).
Increase the home mortgage to finance a business
Another option available to the buyer to obtain a mortgage for businesses is to finance a property, such as their home, to obtain liquidity and finance the activity (for the purchase of machinery, furniture, marketing actions for the promotion of the company…).
This is known as a liquidity mortgage or capital increase, and it is essential to protect the borrower, especially if the property is the main residence as stated by the Law 5/2019 on real estate credit. It is formalised in a public deed before a Notary for mortgage novation.
You can learn more about what it is in this article:
Finance on the company's real estate assets
For already established businesses, it is possible to mortgage real estate such as premises, land or offices to obtain bank financing. It is usually allocated again to business expansions, investing in equipment or covering treasury needs. It is common, in these cases, for the mortgage loan for business to be signed by the administrators or, where appropriate, by a proxy, with the general commercial notarial power of representation required.
Discover the powers and commercial procedures processed at the notary and how to expedite them.
Mortgages to set up a business with a mixed character
In this case, we are talking about financing both for the purchase of the premises and to obtain initial liquidity for the company. Financial institutions also grant this type of loan, which must also be formalised before a Notary.
Mortgage on new construction
In projects for the promotion or construction of warehouses or premises, a mortgage can also be established on new or future work. This type of mortgage for companies is common in development companies or cooperatives.
And what if there is no property?
For entrepreneurs who do not have real estate, there are movable guarantees on machinery, vehicles or exploitation rights that are also formalised before a Notary.
You can obtain much more information in this article:
Conclusion: notary in mortgages for company in Barcelona
Formalising a mortgage for companies is a key step in the growth of any business. It is always important to know that, although the financial institution usually proposes a notary, it is the client who has the right to choose freely.
At JLA Notarios, as notaries in Barcelona, we offer personalised attention for companies and entrepreneurs: we review the loan conditions, provide personalised advice, draft the deed in accordance with the Law and take care of all the details of the deed.
Furthermore, we can assist you with many other commercial and corporate transactions, such as the incorporation of companies, capital increases, sales of shares or powers of attorney. Check all those you can expedite online and without travel at our online notary.
If you need a notary specialised in business and financial Law, do not hesitate to contact us.
