All about Commercial Real Estate Loans

Posted on January 10, 2009 @ 2:22 am
by Mary Bush

Commercial real estate loans are those which can help you purchase, build or refinance commercial properties owned by you or your company. Such loans are designed to help acquire, construct or simplify payments for residential income properties, like apartment buildings, commercial business properties (offices), retail and warehouses and development projects like a condominium and subdivision projects. Thus commercial real estate loans are available on all types of income producing and commercial properties, including: Shopping centers; Motels and apartments; Office buildings; automobile dealerships; Health care facilities; Owner occupied buildings; Manufacturing facilities and more. Commercial real estate loans can also be used to refinance existing debt.

There are a whole lot of free commercial mortgage lender databases on the Internet to help you find out mortgage lenders and commercial construction lenders who will process your application. These search directories can really be very effective tools, if you know how to use them. As a general rule, you should only use commercial mortgage lender databases that give you direct links to the lenders, not brokers. This way, you cut the paper trail and do business directly with the lender.

Almost all the commercial mortgage lender databases require you to fill out a basic commercial loan application. After you submit your application, the database matches your data with hundreds of commercial mortgage financing programs. The results of the search will depend on your location and the type of commercial real estate loan you are looking.

Your application will be matched with commercial lenders who best meet the information you provided. You can compare rates and choose lenders who you think will work for you. If you use commercial mortgage lender databases to your advantage, you can easily secure loans for virtually any commercial property purpose.

Most traditional banks will require several years of tax returns in order to qualify for a commercial real estate loan. This is being considered as one of the major problems that ought to be avoided while applying for a commercial real estate loan. Also business acquisition loans for commercial properties such as restaurants, bars and auto service businesses are frequently hard to find. Under most circumstances, commercial borrowers should not use a lender that requires a business plan. Another problem is that many traditional banks require three to nine months to close a commercial mortgage.

Commercial real estate differs from residential real estate. Unlike residential real estate, commercial property has extra fees and costs. The thing is that these may not be immediately apparent. So try your best to have a thorough understanding regarding the terms, conditions and all before you commit a deal. Expenses usually include property taxes, insurance, management fees, tenant improvements, replacement reserves, leasing commission etc.

It can happen at times that banks may turn down business owners even if they have great credit and a positive cash flow. Reasons for this include loan size, portfolio management etc. Usually there are two main types of commercial real estate loans- short term and long term. The short term loans consist of bridge loans that are used to keep the business running until larger and longer term loans can be obtained. The larger loans are for larger amounts and typically last for the life of the commercial real estate property. Commercial real estate loans are really important for the growth and expansion of companies.







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