Atom bank cuts commercial mortgage minimum to £100,000

Atom bank has cut the minimum loan size for its commercial mortgage range to £100,000, responding to broker demand and widening access to funding for small and medium-sized businesses. The bank has also reduced rates for new applications across all products by up to 0.94%, effective immediately.

The move follows a reduction to £200,000 in February, itself a response to broker appetite in the lower end of the market. Many high street lenders will not lend below £250,000 unless the client has significant ancillary business or an existing relationship manager, and Atom says 53% of brokers on its panel report that at least a quarter of their client enquiries fall within the £100,000 to £250,000 bracket.

On pricing, Atom has restructured rates to improve competitiveness at 50–65% loan-to-value. New applications for trading businesses will see an average reduction of 0.25%, while commercial investment cases will benefit from an average cut of 0.34%.

The bank credits ongoing operational improvements for making the changes viable. Enhancements to its broker portal and back-office processes have accelerated service times, with applications consistently reaching agreement in principle within one working day, often the same day. The average time from agreement in principle to offer now stands at five working days. By automating parts of the lending process, Atom says it has freed up capacity to support lower loan sizes without compromising service levels.

Recent additions to Atom's commercial mortgage proposition also include a rate discount for higher-quality cases with a debt service coverage or interest coverage ratio of at least 200%.

Tom Renwick, head of business lending at Atom bank (pictured), said: "Since our reduction to £200,000 earlier in the year, the feedback from brokers and SMEs has been loud and clear, indicating a specific need to reduce this even further." 

"We know that there are very few other lenders supporting businesses at these lower loan sizes, and as a start-up and challenger to the high street ourselves, we want to be able to make a difference where it matters."

Renwick added that the operational gains had been central to the decision. "Our continuous focus on operational efficiencies, driven by enhancements to our digital processes, has significantly accelerated our service," he said. "Crucially, by automating parts of the lending process, we have freed up capacity that allows us to expand our support for SMEs while ensuring we continue to provide the service we are becoming known for."