Mercantile Trust review: property secured business loans for UK businesses

Mercantile Trust is a specialist direct lender that helps business owners borrow against property they already own, whether that is their home or a buy to let portfolio. It is known for manual underwriting and for looking at cases that do not fit a bank's automated checks. Smart Funding Solutions is an independent broker and is not part of Mercantile Trust. It is one of the lenders on our panel, so we can compare its business loans with other secured and unsecured options. You can read more on Mercantile Trust's own website.

01About Mercantile Trust

Mercantile Trust was established in 2016 as part of Norfolk Capital Group, a group that has worked in financial services since 1988. It is based in Watford, Hertfordshire, and lends across England, Wales, Scotland and Northern Ireland.

Its approach is built around people rather than scorecards. Mercantile Trust says each application is assessed by a member of its team, not a computer, and that it takes the time to understand your circumstances because there is more to you than a credit score. It is a member of the Bridging and Development Lenders Association and the NACFB.

Alongside business loans, it offers bridging loans and buy to let mortgages, so it is used to dealing with landlords, property investors and self employed borrowers.

02What Mercantile Trust funds

Mercantile Trust's business lending comes in two main forms, both secured on property:

Key features Mercantile Trust lists include:

• Loans from £10,000 to £500,000.
• Borrowing up to 75 per cent of the property's value, taking existing mortgages into account.
• First or second charge, with loans against your own home on a second charge only.
• A choice of paying monthly or at the end of the term, with both bridging and term loans available.
• Buy to let security including holiday lets, HMOs, multi unit freehold blocks and student lets.
• Funds possible in 48 hours.

Alongside bridging, Mercantile Trust offers term business loans, and a longer term usually means lower monthly payments than a short-term unsecured loan. Our guide to second charge business loans explains how a loan can sit behind your existing mortgage.

03Who Mercantile Trust suits (and who it may not)

Mercantile Trust may be a good fit if:

• You own your home or a buy to let property with equity in it.
• You need more, or want longer to repay, than an unsecured lender will allow.
• You are self employed, a sole trader or a limited company director. It welcomes both personal and limited company borrowers.
• Your credit history is imperfect. It says adverse credit is considered.
• Your property is a little unusual, such as non standard construction, an HMO or a holiday let.

It may be less suitable if:

• You do not own property, or you are not willing to secure business borrowing on your home.
• You need more than £500,000, where a commercial mortgage or development lender may be more appropriate.
• You only need a small sum for a few months. An unsecured or revolving facility could be simpler.

Securing a business loan on your home is a serious step. If repayments are not kept up, the property could be at risk, so take independent advice and be sure the loan is affordable.

04What Mercantile Trust looks at

Because the loan is secured, the property and the equity in it carry a lot of weight. Typical information for a property-secured business loan includes:

• Details of the property: address, estimated value, type and construction.
• Your existing mortgage balance and lender.
• Proof of identity and address for all borrowers.
• Evidence of income or business trading, such as bank statements or accounts.
• For buy to let security, the tenancy position and rental income.
• An explanation of any past credit issues.
• Your plan to repay, especially for a bridging loan, where a clear exit is essential.

A valuation of the property will normally be required before the loan completes.

05Pros and cons

Pros

• Manual underwriting by people, not an algorithm.
• Open to sole traders and individuals as well as companies.
• Adverse credit considered.
• Accepts a wide range of property, including HMOs and holiday lets.
• Lends across the whole UK, including Northern Ireland.
• Choice of term loan or bridging structure.

Cons

• Your home or rental property is at risk if repayments are missed.
• Loans against your own home are second charge only.
• Maximum of £500,000.
• Valuation and legal work can make it slower and more involved than an unsecured loan.

Because the loan is secured, the property and the equity in it carry a lot of weight.

06Applying through a broker vs going direct

When property is involved, it pays to compare. A second charge loan, a remortgage, a commercial mortgage and an unsecured loan can all raise similar amounts, but the cost, risk and paperwork vary a lot. Going direct to one lender only shows you one of those routes.

We look at your property, your business and your credit position, then search the market and approach the lenders that suit the case. We present the full picture, including anything that needs explaining, so you are not repeating yourself to each lender. It is free to enquire; any broker fee is disclosed separately before you proceed.

Use our Instant Quotes tool to compare lenders in minutes.

07Alternatives to Mercantile Trust

• Together: a large specialist property lender offering secured business loans and bridging, often used for complex or larger cases.
• Momenta Finance: offers secured and unsecured business loans for limited companies with a few years of trading, which may suit if you prefer not to secure on your home.
• Paragon Bank: a specialist bank with a strong presence in buy to let and business lending.

For more on the options, see our guides to secured business loans, homeowner business loans and business bridging loans.