How to Qualify for a Commercial Real Estate Loan
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In this brief write-up you will learn the basic insand outs in regards to a commercial real estate loan. We will primarily cover the different institutions that are
available to you; we will also cover different payment methods as well.
The transition from an online business to having a
physical location is a very daunting task. One problem that many business
owners run into besides finding the right location is finding the money they
need. This article will help you with the basics of getting your loan.
physical location is a very daunting task. One problem that many business
owners run into besides finding the right location is finding the money they
need. This article will help you with the basics of getting your loan.
You want to make sure you look in different places
before you commit to an institution. Basically, when it comes down to it, you
have four options; large banks, small community banks, life insurance companies
and private hard money lenders.
before you commit to an institution. Basically, when it comes down to it, you
have four options; large banks, small community banks, life insurance companies
and private hard money lenders.
When it comes to going the bank route, you have two
options large banks–we’ll use the Bank of America as an example–or a smaller
local bank in your city. Most bigger banks have a minimum and maximum loan
amount. The Bank of America has a maximum of $2 million, but will make
exceptions for higher amounts if certain criteria are met. Adversely if you are
applying for a commercial real estate loan with a smaller bank you do not want to go that high. You should always
do your research with the local bank in your city, and be sure to compare all
the features thoroughly.
options large banks–we’ll use the Bank of America as an example–or a smaller
local bank in your city. Most bigger banks have a minimum and maximum loan
amount. The Bank of America has a maximum of $2 million, but will make
exceptions for higher amounts if certain criteria are met. Adversely if you are
applying for a commercial real estate loan with a smaller bank you do not want to go that high. You should always
do your research with the local bank in your city, and be sure to compare all
the features thoroughly.
You
have to weigh all of your options when looking for a commercial real estate loan
The other two options you have are life insurance
agencies and private hard money lenders. Life insurance companies have pretty
good rates, however, they tend to grant loans to businesses that are in good
locations. Private hard money lenders outsource a lot of the money used from
investors. This method of getting a loan is usually the fastest, however, the
interest rates are a little higher than banks and life insurance companies.
agencies and private hard money lenders. Life insurance companies have pretty
good rates, however, they tend to grant loans to businesses that are in good
locations. Private hard money lenders outsource a lot of the money used from
investors. This method of getting a loan is usually the fastest, however, the
interest rates are a little higher than banks and life insurance companies.
Qualifying for and paying off your commercial real
estate loan.
Now that you know where you could apply for a commercial real estate loan, you are
probably asking yourself, what do I need to qualify? Having a plan on what you
want to accomplish with your business is key. Make sure before you go into your
consultation you have a concise and clear business plan. For some companies, a
solid business plan will be enough to get you the loan that you are seeking.
probably asking yourself, what do I need to qualify? Having a plan on what you
want to accomplish with your business is key. Make sure before you go into your
consultation you have a concise and clear business plan. For some companies, a
solid business plan will be enough to get you the loan that you are seeking.
So you have figured out what lender you are going to
go with, and you have a clear plan on the business that you are trying to your
potential lender. Your lender has taken an interest in your proposal and is
looking to go forward with your commercial real estate loan. The next thing you have to decide on is how you want to
pay back your loan. You have two options when it comes to this: an interest
rate reset or a balloon payment.
go with, and you have a clear plan on the business that you are trying to your
potential lender. Your lender has taken an interest in your proposal and is
looking to go forward with your commercial real estate loan. The next thing you have to decide on is how you want to
pay back your loan. You have two options when it comes to this: an interest
rate reset or a balloon payment.
With an interest rate reset payment plan for the
initial years of your loan you have a fixed interest rate. After that period is
over the rate can decrease or increase depending on the economy. In regards to
a balloon payment over a time period, the debt that you owe gradually reduces
over time. After the initial years, you have to pay a lump sum of the remaining
balance.
initial years of your loan you have a fixed interest rate. After that period is
over the rate can decrease or increase depending on the economy. In regards to
a balloon payment over a time period, the debt that you owe gradually reduces
over time. After the initial years, you have to pay a lump sum of the remaining
balance.
Now that you have the basics, you should feel
confident in getting your first commercial real estate loan, giving your business a physical location.
confident in getting your first commercial real estate loan, giving your business a physical location.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
www.Level4Funding.com
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.