Typical commercial loan rate

[Seany88]

As title really, just wondering what's the sort of rates that the banks are dishing out? I got BoE base plus 2.7%, is that competitive?

[FUBAR]

Had our BoE + 1% pulled before Christmas and now on LIBOR + 2.25%. Luckily, when the bank first informed us of this LIBOR was >3% but currently its down nearer BoE base.

They also tried to screw me for an annual loan review fee, but have negotiated a 4 year review. Saved a few quid

[Benzman]

Just been quoted 3.5% to 4% over BoE Base Rate for a residential development loan of £1.75million.

Before the whole banking system went belly-up quotes for this type of loan were 1.5% to 2% over BoE Base Rate.

It really depends what the loan is for and how much security is offered.

[Redarress]

Libor based loans scare me .Should they ?

[FUBAR]

We weren't given the choice. Our way or the Highway

[Seany88]

FUBAR said:

Had our BoE + 1% pulled before Christmas and now on LIBOR + 2.25%. Luckily, when the bank first informed us of this LIBOR was >3% but currently its down nearer BoE base.

They also tried to screw me for an annual loan review fee, but have negotiated a 4 year review. Saved a few quid

I noticed after going over the documents that I got charged £3.5k arrangement fee! Its ridiculous! I'm going to have to check on whether there's an annual loan review fee though...

So...given that you've taken a business loan out in what instances is it better to pay it off sooner? Mine's a 25 year loan...

[FUBAR]

Try a £200k arrangement fee

In an ideal world paying off the loan sooner rather than later is obviously better, but you have to weigh up whether keeping the loan for longer allows you to grow the business faster by using the bank's money. Being in property investment maybe I have a slightly different view on loans than a regular trading company?

Edited by FUBAR on Friday 12th March 16:33

[Biggles111]

Just to add to the rates quoted; I was recently offered LIBOR +0.6%, typical rates seem to in the mid 3's at the moment, though arrangement fees can add 2-2.5% to the upfront cost of this.

[FUBAR]

Biggles111 said:

I was recently offered LIBOR +0.6%, typical rates seem to in the mid 3's at the moment,

Blimey.

[2 5HAN]

In my experience the banks tend to offer rates dependant on the type of business and the risk they are lending against.

We have varied rates dependant on the projects and the business we are borrowing against.

Same bank three different sets of rates for our two different businesses

[Seany88]

FUBAR said:

Try a £200k arrangement fee

In an ideal world paying off the loan sooner rather than later is obviously better, but you have to weigh up whether keeping the loan for longer allows you to grow the business faster by using the bank's money. Being in property investment maybe I have a slightly different view on loans than a regular trading company?

Edited by FUBAR on Friday 12th March 16:33

Whattt!? I almost feel privileged now Though I'm guessing (hoping) that your borrowing is MUCH larger than mine!

I know borrowing money helps you gear up and yes I want accelerated growth but am trying to weigh up whether that's a decent rate to be on in which case keep that facility and save capital for when the next opportunity comes along rather than pay it off and go through the hassle of applying for a loan again.

[wattsm666]

You may also want to consider building up a cash reserve rather than paying your bank loans off. I have seen the situation where a company has been very prudent and paid it all off, then got into trading difficulties and unable to get new facilities, they therefore didn't have much of a buffer. Just another point of view.

[FUBAR]

Seany88 said:

Whattt!? I almost feel privileged now Though I'm guessing (hoping) that your borrowing is MUCH larger than mine!

Well, you know how it goes...if you owe the bank £250k then you are in trouble. If you owe the bank £25m then they are in trouble