When you need money to purchase a business property, whether to open a new business or expand your current one, commercial mortgage loans can help you get the cash needed to move forward. You can apply for a commercial mortgage loan through a traditional lender such as a bank or through a private lender. To get approved for this type of loan, you should already have a property in mind that you’d like to buy, a good credit history, and either a well put together business plan or proof of a stable financial history for your business.
No matter which lender or type of commercial mortgage loan you choose, there are many benefits supplied by this type of loan. Let’s look at some of these benefits and see if they apply to your situation.
Buy or Expand while Maintaining Cash Flow
Even if you already have plenty of cash on hand, you might not want to spend it all on a new commercial property purchase. Obtaining a commercial real estate loan will allow you to keep a steady cash flow while paying back your loan over time. A steady cash flow will give you freedom to purchase supplies and inventory, pay employees or contractors, and promote your business. And best of all… the interest on your loan is tax-deductible!
Numerous Business Opportunities
A commercial mortgage loan will open a world of opportunities for you to start or expand your business. These loans can be used for office buildings, restaurants, repair shops, health care facilities, retirement homes, apartment complexes, condos, hotels, strip malls, schools, car washes, or even churches. The loan will enable you to purchase an existing building, construct a new building, or buy multi-unit properties for rental purposes.
Better than Renting
Buying is better than renting… even in the business realm. If you must rent due to location or circumstances, then by all means, don’t allow a rental situation to keep you from pursuing your business dreams. But in most cases, it will benefit you now and in the future to buy your own business property. When you own a property, you can make improvements or remodel whenever needed. You can also build equity as you make monthly payments. In some cases, renting will be the same or even more than a mortgage payment. So, why waste money on rent payments month after month if you don’t have to?
Renting will also place you and your business at the mercy of the building’s owner. If the owner decides to sell or retire, you could be left without a building to operate your business. If the owner sells the property to another investor, your rent agreement could change significantly and your rental payment may increase as well.
Going Out of Business
If for any reason you have to close your business, you’ll be able to sell the property along with the business – not just your business’ name and inventory. Most commercial mortgage loans are assumable, so a qualified buyer could take over your loan terms and payments without having to start a new loan of their own. You should check with your lender or broker to be sure this can take place if ever the need arises.
Customized for Your Loan Needs
Another benefit of commercial mortgage loans is you can usually pick and choose which lender, broker, or type of mortgage you’d prefer. There are private lenders that can work with you if you have special loan needs or if a major lender has turned your loan down due to credit reasons. You can also choose from a number of mortgage plans, including fixed rate mortgages, variable loans, balloon mortgages, and interest-only mortgages. Though fixed rate mortgages are the safest, your situation may call for a lower initial payment or other special needs. You can speak with a broker to find out which option best fits your business plans.
Whether using a mainstream lender or a private lender, be sure to check out your online options as well. You can obtain a commercial mortgage loan through an online broker or private lender and potentially save lots of time and money!
By: Chris Robertson
About the Author: