Liverpool broker urges clearer guidance as small business borrowers navigate the 'death of the high street'
The slow decline of the high street is reshaping the commercial property landscape - and Tom Wright (pictured) has had a front-row seat. “The market’s undergoing a huge transformation with the death of the high street,” said Wright, “You walk through any city centre or even a small town, and the number of shuttered shops is quite worrying.”
That shift, while challenging, has created opportunities for small-scale developers and investors. Many are converting former retail units into residential flats or short-term lets, using permitted development rights to bypass lengthy planning processes. "In many cases, developers can convert retail units under permitted development rights without full planning permission – though this depends on the area and building restrictions such as conservation zones or Article 4 Directions." Wright explained. “It makes a lot of sense for developers to focus on that area because the demand is there - it’s not going away in city centres.”
Semi-commercial properties have also gained appeal. A retail unit with residential space above offers income diversification and flexibility. “You’re hedging your bets by taking advantage of good commercial clients and also short-term tenants,” he said. Some landlords are even reconfiguring commercial-only units into mixed-use properties to maximise returns.
Helping clients understand the finance process
While the property market evolves, many SME owners are still learning how commercial finance works. According to Wright, business clients often expect a residential-style process. “They know everything about the product they sell or the advice they give - but they expect a commercial mortgage application to be like a residential one,” he said.
This is where brokers add value. Many clients are surprised by the size of the deposit required - typically 25% to 35% - and higher interest rates. “We often have to tell people to save up a lot more,” Wright noted, “but once they understand what lenders are looking for, they can prepare properly.”
Commercial lending relies heavily on a borrower’s trading history. “If someone’s been trading for a year and doing well but hasn’t submitted company accounts yet, banks are unlikely to lend,” he explained. Most lenders want two years of accounts and projections. “It’s about showing stability and planning ahead.”
Stricter lending, but more targeted opportunities
Despite the increase in available commercial stock, underwriting criteria remain firm. “It’s all based on risk models,” said Wright. “A lot of the shuttered shops represent failed businesses, especially during Covid, or those displaced by online retailers.”
The cost pressures facing physical retailers are significant. “The cost structure of storefronts is staggering - rent plus warehouse costs - compared to online models,” he said. Still, Wright believes physical premises remain relevant with the right strategy. “The key is understanding the shift in consumer habits and building resilience into the business model.”
High street banks have pulled back, but this has created space for brokers to step in. “Most banks now refer clients to brokers who specialise in this space,” Wright said. “It gives clients access to a wider range of solutions.”
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Specialist and alternative lenders are increasingly filling the gap. “These lenders are more flexible and willing to back non-traditional borrowers,” Wright said. “They may charge more, but for many clients, it’s a way to get started.”
Brokers play a critical role in helping clients match with the right lender. “We gather real documents - bank statements, projections, limited company accounts,” Wright explained. “It’s about understanding the client’s business, identifying strengths, and building a case for funding.”
With a few years of trading history, clients can often refinance on better terms. “We always think long term - 20 years down the line,” said Wright. “That initial higher-cost loan is a stepping stone, not a dead end.”
A more transparent, forward-looking process
Commercial owner-occupied mortgage applications now start with a deep dive into the business plan. “To get a commercial mortgage in the first place, everything is assessed upfront,” Wright said. “It’s a robust process - but it sets the client up for success.”
Some sectors, like hospitality, face extra scrutiny, but they also present solid opportunities. “Pubs and restaurants do close, but another tenant usually replaces them,” Wright said. “For landlords, they can be stable income sources.”
Even vacant or unusual properties are being reconsidered. “They’re bricks and mortar and can be converted,” he said. "Churches for instance are sometimes repurposed into apartments, offering curb appeal and unique architecture, although conversions require careful planning due to listed status or heritage protections. They offer curb appeal and solid value.”
Lenders, for their part, are becoming more optimistic - and more diligent. “They’re asking for more documentation, which is a good thing,” Wright said. “It’s about making informed decisions.”
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For business owners, the process encourages clarity. “It helps clients think about their future plans and how they’ll manage the loan,” he said. “You can’t just hope things will keep ticking along - you need a strategy.”
Ultimately, Wright sees the broker's role as guiding clients to think beyond rates and repayment terms. “If a client can’t or won’t answer the big questions, they probably aren’t ready for the loan - and that’s part of our job to figure out,” he said.
