Why not simply use a bank?
Banks are happy to finance commercial property, but apply strict criteria: a maximum loan-to-value of 60% to 70%, lengthy processing times and little scope for redevelopment, vacancy or conversion. Private property lenders do not have the same constraints and primarily assess the property and the plan.
What can you finance?
- Purchase of your own business premises or warehouse
- Investment property generating rental income
- Redevelopment or conversion into housing
- Energy efficiency improvements: from energy label G to C or better
- Refinancing a mortgage approaching maturity
Terms in practice
| Element | Bank | Private lender |
|---|---|---|
| LTV | 60–70% | 70–80% |
| Interest | 4–6% | 6–10% |
| Processing time | 8–16 weeks | 2–6 weeks |
| Vacancy | Difficult | Open to discussion |
| Term | 10–20 years | 1–5 years |
What is assessed?
- Appraised value both tenanted and with vacant possession
- Rental income: lease duration, tenant quality, indexation
- Debt service coverage ratio: does the rent comfortably cover interest and principal repayments?
- Exit plan: sale or refinancing at the end of the term
- Sustainability: energy label C is mandatory for offices, and a growing number of lenders base decisions on energy labels
Watch the costs
In addition to interest, you almost always pay an arrangement fee (1% to 2%), valuation costs, civil-law notary and mortgage deed fees, and sometimes an exit fee. Calculate the total costs over the term, not just the interest rate.
Who is this suitable for?
Business owners who need to move quickly on a purchase, property developers, and owners who want to improve their property's energy efficiency but cannot secure bank financing. A private lender is also often the only realistic route for a property with temporary vacancy or a lease nearing expiry.
Conclusion
Commercial property financing through private debt carries higher interest costs, but offers speed and greater leverage. It is often an interim step: use private financing now, then refinance with a bank once the property has a stable tenancy.
Sources and scope
Examples and policy choices in this article are illustrative, not a current quotation, fixed standard or financial or legal advice. The editorial revision date relates to the summary, structure and source references; it is not a reference date for the underlying data.
| Primary source | What is it used for? |
|---|---|
| KVK (Dutch Chamber of Commerce) — checking business partners | Company identification and checks on business partners. |
Source links support the topic mentioned, but do not automatically substantiate all percentages, time frames or examples in this article. Check current terms and rules with the responsible authority.
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