Commercial Real Estate Loan

Are you in need of a commercial real estate loan is available for commercial properties that generate an income. Typically commercial real estate loans are used by large companies like health care facilities, shopping centers, etc. Companies that seek out commercial real estate loans are usually in need of the money to refinance existing debt or to help the, bridge the gap when they are selling property at the same time when they are purchasing it.

In order to acquire a commercial real estate loan you need to take a look at your business credit rating and find out where it currently stands. You need to seek out lenders that can work with any type of credit. While it's best to have a credit rating of 70 or higher, it may not be the case for your business based on your past payment history and other factors.

There are 2 main types of commercial real estate loan options to choose from, a short-term loan and a long-term loan. The short term loans are usually called a bridge loan or gap financing. You will turn to this loan when you need money to sustain your books during a time when you are selling and buying property. Since there may be a month or two where you need to "float" money, it helps to have a short-term loan available.

The one thing to know about commercial real estate loans is that the interest rate may be incredibly high since it's just a short-term "needs-based" loan. A short-term loan allows you to keep your business running while you are waiting on the approval for a long-term loan. During this time it is imperative that you use the financing well because you are required to repay it in a short-time frame. You must be very careful when dealing with a short-term loan that has high interest because it can ruin your business if you don't have the cash flow needs to pay the loan.

There are some other concerns that arise with commercial real estate loans. Here are some things you need to know and what you can do to make sure your business is safe and protected:

1. Tax returns. One problem you may face is dealing with your tax returns. If you don't have the financial records to show a lender your past 3-5 years of tax returns, they may disqualify you for a commercial real estate loan. They must be able to verify your personal assets and income in order to determine if you are worthy of a loan or not.
2. Property category. A big problem that may stand in your way when you are applying for a commercial real estate loan is the property you plan to build with the financing you acquire. You may be able to acquire money for an apartment complex but you find it challenging to acquire money for a property built for an auto repair company or club. Specialized propertied are not always considered a low risk investment and lenders may have reservations about offering you the money initially.
3. Loan terms. When you apply for a loan, you need to read the fine print about the loan terms. What does your interest rate look like and are you agreeing to a balloon payment plan? Be careful about balloon payments because they can be pretty expensive to a business. Typically a commercial real estate loan will last about 7 years or less so make sure to speak with the lender and work out a payment arrangement that doesn't hurt your chances of repaying the loan in a timely manner.

Corporate Credit Concepts specializes in commercial real estate loan. For more information about commercial real estate loan and how it might benefit your business, please CLICK HERE for a free phone consultation.

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