A number of business owners want to know everything about commercial mortgage info. This is because they either want to refurbish their business or expand it. As a responsible owner, having all the information about the procedure before getting started with it is a smart move. Only then applying for a suitable commercial loan option will be easy.
For people who do not know about commercial loans, basically there are different types of them available. Each loan option is suitable for every type of business. Continue to read further and gather more information about commercial loans, and everything that comes along.
Understanding Commercial Mortgage
Close to residential loans, commercial ones can be selected when someone wants to purchase a commercial property and get it renovated. The below mentioned comes under the category of commercial properties.
- Retail establishments
- Industrial buildings
- Office space
A number of commercial loans require the property to physically reside in at least fifty percent of the building. Until and unless the same is done, the owner has to opt for an investment loan. Now when it comes to the terms and conditions, all of them may differ from one lender to another. Additionally, the property that has to be financed is also taken into consideration. The interest rates are either variable or fixed. The down payments fall anywhere between ten to thirty percent. Lastly, the repayment period is anywhere between five to twenty five years. With all the basic information, now let us find out about the type of commercial mortgage rates and loan types available.
Different Type of Commercial Loans
Hard and Soft money Loans – This loan option is somewhat similar to bridge loans (defined ahead). The primary difference is hard money loans are provided by private investors and lenders. Moreover, they have higher down payment prerequisites. On the other hand, bridge loans have limited repayment period, higher rate of interest and down payment. However, one can easily qualify for them. Now let us understand soft money loans. This loan type is a hybrid between traditional loan and hard money. Soft money loan lenders focus more on credit score. If a borrower has a higher credit score, then they automatically obtain a lower rate of interest. If you want to apply for a commercial loan, take a closer look at both the options and then see which one is suitable according to your business prerequisites.
Commercial bridge Loans – Bridge loans provide quick financing. Basically, they bridge the gap until and unless the commercial property owner secures financing. This loan option is provided by alternative lenders and not credit unions and banks. Because a short repayment period increases the risk for a lender, it is not easy to qualify for this loan option. Owners usually need to have a great credit score. Only then the loan application will be approved.
Now that you are familiar with commercial loans, it is time to understand which one is apt for your business.
Which Loan Option is Apt for your Business Requirements?
Below are some of the factors that will allow you to determine a suitable commercial loan option.
Find out how quickly you need the Loan – If you need fast funding, speak to the lender about the same and then see which loan option will work wonders for you. A reliable lender will always allow you to make an informed decision which is why depending on them makes sense. Seek a piece of advice and the selection procedure.
Do some research and narrow down the Options – Take into account your business prerequisites and see which loan option is apt for you. For example, if you have a great credit score, then applying for a traditional commercial loan is recommended. On the other hand, if you do not have a great credit score, opting for hard money loans is suitable. Therefore, examine everything and then make a final decision.
Want to opt for a commercial loan? We hope this piece has helped you enough.