Commercial Real Estate Loans

Business owners who need to finance real estate purchases and property need commercial real estate loans. These loans are perfect for companies and individuals that are investing in new businesses or have plans to expand or takeover commercial real estate already in existence. They can be used for financing new business equipment, buying land, or buying buildings or facilities used for business purposes. They may also be acquired for the purpose of remodeling or expanding current structures and for refinancing purposes.

Commercial real estate loans are often tailored towards the individual needs of the company. Those who need money quickly for purchases or refinancing may find that they receive the loan upfront. Those who are planning on building commercial structures and facilities may receive the money in disbursements that are given according to the building schedule.

When considering commercial real estate loans you’ll need to determine the features or terms of the loan. First, determine how much you need and how much the loan’s minimum and maximum limits are as some loans begin at a set amount. Also, make certain that the building or commercial project that you have planned is covered by the loan. It’s important to consider whether or not you want to lease or purchase. Purchasing comes with more responsibility and this isn’t a decision that should be made lightly. Determine beforehand what the loan’s interest rate will be as well as the maximum loan to value. Also of great importance is the length or term of the loan as each loan will have different term limits.

Other requirements may be based upon the commercial real estate itself. Some lenders will specify the length of the business in question and will only approve loans to established businesses. You may find that lenders will only approve those who have established commercial real estate businesses for two or more years. If you are buying property, you’ll need to have a copy of your purchase contract to show to the lender. Many lenders will also require a current tax assessment or appraisal on the property. It is also possible the lender will require a third party assessment or appraisal of the property or structure the borrower is interested in purchasing.

Additional requirements often asked for when borrowers try to secure commercial real estate loans include the past two years worth of tax returns (business and personal); other financial documentation, insurance such as property, flood, hazard and more.

The amount of time it will take to repay your loan is of the utmost importance and you must ensure that you are thoroughly prepared to handle the financial commitment and responsibility of a commercial real estate loan. Some of the questions that you should ask beforehand is whether or not you are ready to expand your business by offering outside partners and investors; whether you should buy or lease equipment; whether commercial real estate loans are best for your business or would you be better satisfied with a line of credit; and which type of loan will best meet your financial needs.

Determine how much you would be required to pay in a down payment for equipment as well as the loan term interest rate, and the amount of months or years you would need in order to buy equipment. Compare that figure with the cost of a security deposit, the amount of payments you would need to make monthly plus any additionally fees, and the cost of maintenance. Some equipment companies provide you with the opportunity to purchase equipment after you lease it.

When choosing commercial real estate loans make certain to determine the loan amount plus the federal and state tax rate as well as the interest rate and the loan term in months. Determine which loan will best meet your needs and fit within your budget.

Make certain that you inquire with the lender regarding their requirements and have a clear understanding of what’s expected of you to ensure your transaction goes through smoothly.