How to buy a business premises without a bank

Buying or remodelling a business premises costs money. If the bank has turned down your loan application, there are alternative forms of financing available for a business mortgage.

Are you looking for a new building for your business? Are you considering buying another commercial building? Or are looking for refinancing to make energy upgrades to the building? Another possibility is that you need smaller, more flexible accommodation because more people are working from home. How do you find alternative funding for your real estate plans? Here are your options.

5 alternative types of financing

If you are unable to fund a business property using a business mortgage, crowdfunding, Qredits, leasing, business angels, and borrowing money from family and friends can provide alternative solutions. However, there are certain differences. For one, the term of the loan is shorter than for a business mortgage. A business mortgage commits you to 10 to 20 years, whereas for alternatives, the maximum term is 5 years. As with business mortgages, alternative forms of financing comprise a maximum of 70% of the purchase amount of a commercial property. You need your own money to cover the remainder. Alternatively, you can find additional funding for the last 30%.

1. Crowdfunding

Crowdfunding involves asking investors to invest through a platform. The maximum amount you can raise through crowdfunding is €5 million.

Several crowdfunding platforms finance real estate. Crowdfunding platforms specialised in funding property include:

• Mogelijk: provides real estate financing ranging from €50,000 to €2 million.
• Crowdrealestate: can finance real estate for amounts ranging from €250,000 to €2.5 million, with a maximum term of 3 months to 10 years.
• Briqwise: provides real estate financing starting at €100,000, with a term of between 5 and 20 years.
• FDCfunding: finances real estate through crowdfunding or a bank, up to €2.5 million.
• Matching Capital: provides real estate loans for acquisition, renovation, conversion, and/or refinancing.
• MaxCrowdfund: international real estate platform.

There are also crowdfunding platforms that provide financing for working capital and business assets, including real estate financing:

• Collin Crowdfund: provides business loans, including 2 types of real estate loans from €50,000, with a term of between six months to five years.
• Geldvoorelkaar: provides financing, including real estate loans starting at €50,000, with a term of between 6 months and 5
• Waardevoorjegeld: provides financing, including real estate loans.
• NL Investeert: combines bank loans with non-banking loans, including the option of 100% funding.
• Horeca Crowdfunding: focuses on investments and financing in hospitality concepts, including real estate.

2. Qredits

Qredits provides mortgage loans of between €50,000 and €250,000, with a term of between 1 and 20 years. You pay monthly repayments and interest. The credit facility is intended for commercial property you use for your own business, and not for buildings purchased as an investment.

3. Leasing

Sale-and-leaseback transactions involve selling business assets, in this case your commercial building, to an investment firm. You subsequently lease it back. This might be a solution if your business is struggling financially. The proceeds from the sale will then give your cash flow a temporary boost.

4. Business angels

Business angels are entrepreneurs who invest in innovative businesses during the start-up and growth stages, intending to make a profit. In addition to money, business angels offer knowledge, their own experience in the business world, and networking opportunities for your business growth. You can also use the funds you receive from a business angel to acquire business premises. For example, in combination with investments in business assets and working capital.

5. Family and friends

Another option is taking out a private loan from family or friends. Set out the terms of the loan carefully and be aware of the pros and cons. Clear terms and conditions increase your chances of preserving the relationship with your friend or family member.

Bridging funds

Sometimes it takes a little while for you to receive the proceeds of the sale of your old commercial building or until you receive a long-term loan. You can cover this period with a temporary loan. Bridge financing specifically for real estate has short turnover times. Often as little as a few months. The following financiers can help you bridge this period:

• Fiduciam: provides bridge financing starting at €500,000, for a period of 6 months to 3
• Swishfund: provides bridge financing starting at €50,000 and up to €500,000, for 3 to 12 months.

Selection criteria

If you are looking for an alternative form of financing to acquire commercial premises, you must take note of the following items:

• Required amount: alternative forms of financing are available from €50,000 up to €2.5 million.
• Fees, charges, and terms and conditions: compare fees and charges such as interest, repayment, closing fee, and administrative fees if you change your legal form. Check the terms and conditions for early repayment. Will you need to pay a fine, or are you exempt from them?
• Small print: be sure to read the small print of the credit proposal. You should also check if the financier has a quality mark (in Dutch) and is a member of a trade or industry association. If this is the case, they are bound by the rules of a code of conduct. The code of conduct requires that the parties involved communicate clearly during the funding process.

Consider enlisting the support of a certified financing adviser (in Dutch) who can accelerate the process through their knowledge and network.

More sustainable through grants and subsidies

More stringent rules for compliance with climate targets and energy consumption have been in place for buildings since 2021. Your business premises must have an energy label for utility buildings (utility buildings comprise all buildings except residential properties/homes). An energy label tells you the level of energy efficiency of your commercial building. If your business consumes more than 50,000 kWh of electricity or 25,000 cubic metres per year, you must also comply with the energy efficiency obligation. If you are planning to purchase or remodel a commercial property, you must upgrade the building in line with the new requirements. For example, heat pumps, solar panels, and additional insulation that enables you to save on energy costs. The additional expenses you incur when constructing or remodelling the commercial building can often be included in the loan. In addition, there are grants and subsidies to help you reduce your costs.

Help with financing

Getting help will increase your odds of success, and with the right adviser and a good financial rationale, you will get your financing application approved in no time. These advisers will help you get started. For general information, contact the KVK Financing Desk.