9 Tips for Commercial Real Estate
Commercial loans can be difficult to get for young or burgeoning businesses that do not have a recognizable brand. Sometimes small businesses feel as if bankruptcy or foreclosure can be just around the corner because the influx of money from deposits and sales can swing so wildly between business ups and downs. Some real estate loans can be expensive to obtain, have difficult loan terms, and require unfavorable repayment terms. Here are nine tips for finding commercial real estate loans.
Environmental contamination can be found in properties all the time. To protect themselves, most lenders ask for the completion of a toxic report on the property in question.
Whether the lender is an optimist or tends to exaggerate, the truth about loan processing time is almost always in question. When the clerk mentions a processing time of 45-days, what they probably mean is three to four months.
Beware of low interest rates and short terms offered by direct lenders. Some con men will masquerade as commercial loan providers and then walk away with expensive applications fees. Protect yourself by checking credentials before providing any money.
Since the recession, money has become more difficult to get by small businesses and new companies. To save yourself time and worry, submit commercial real estate loan applications to three or four commercial lenders at the same time.
Although your mortgage broker may want to be helpful and order an appraisal for you, do not accept the offer. The law states that the lending institution must order the appraisal to insure they are responsible for any results should they come into question at a later date.
Small banks can quickly provide small business loans but may have more trouble satisfying a request for a large loan amount. To prevent problems, take large loan requests to large banks or commercial lenders.
Studies show that if your lender resides near your business property, the chances are you will get a good deal on a loan. On the other hand, lenders that are in other cities or states seem to offer less beneficial terms on loans.
If your company has a constant cash flow, use a deposit relationship as a negotiation tool. This can improve the loan terms significantly.
Once your lender has provided a term sheet and the loan terms are acceptable, you can agree on offers for an appraisal. Do not allow one before you get the sheet.
Commercial real estate loans can be difficult to find with satisfactory terms. Use the nine tips above to help save time and effort in finding the right loan for your company.