How to Get a Business Mortgage

There are many factors to consider before securing a business mortgage. The key factors include interest rate, balloon payment, and length of loan. You may need a longer loan term to avoid balloon payments, and you should consider your business’s growth and expected future profitability to determine how long you will need the loan. While a balloon payment may seem like a big issue today, it could be impractical two years from now. In five years, it will be a non-issue. 주택담보대출

Getting a business mortgage

Getting a business mortgage is not an easy process. While it might take six weeks to secure a loan from a bank, it can be a breeze if you prepare your documents and evidence correctly. The process can be further slowed by valuations and the legal side of the process. If you can, it may be worth working with a commercial mortgage broker. These professionals can help you navigate the process and provide you with a competitive interest rate.

Down payment requirements

While you are pursuing a business mortgage, you may have a down payment that is a catch-22. If you’re just starting out and don’t have a large down payment to put down, you can still get the financing you need. In most cases, the down payment required by SBA products is as low as 15%. If you have been in business for more than two years, your down payment can be as high as 20%.

Interest rate

While the private mortgage rates are at historic lows, business mortgage rates are usually higher than those for residential loans. On average, business mortgage rates are in the range of four to five percent. However, interest rates for commercial real estate loans can vary wildly, depending on the business’ age, credit score term, type of business, location, and other risk factors. In some cases, interest rates can be as high as ten percent. Read on to find out how to choose a lender with the lowest rates.

Liquidity requirements

Many lenders consider liquidity levels when qualifying businesses for a business mortgage. For example, if a business is in the business of selling stamps, liquid assets will be preferable to other assets because they can easily be converted to cash. A stamp store, on the other hand, may hang onto inventory for a while to get the best price. Bonds and stocks, however, can easily be sold. Liquidity requirements for business mortgages vary widely, and a strong broker can help you determine the requirements of your loan program.

Refinancing a business mortgage

One way to lower monthly payments is by refinancing a business mortgage. The benefits of refinancing a business loan are clear, but the process can be difficult for small business owners. For example, you may need more funding to expand your business, but the additional funds might also be used to smooth out cash flow fluctuations. Refinancing a business loan comes with new fees, such as origination and underwriting fees, and prepayment penalties. Before refinancing your business loan, be sure to evaluate whether the benefits outweigh the costs.