How to get business real estate loan

Introduction

Whether you are buying commercial real estate as part of an investment venture or you are looking to expand your business by building in a different location, chances are you are going to need someone who is able to help you with the financing. Even the most successful businesses are unable to purchase everything associated with a commercial transaction of this scale without a little help from a lender.

Instructions

Getting approved for your business real estate loan can mean the difference between moving your company forward and remaining stagnant. You need to make sure that you know as much as possible about the real estate lending process so that you can prepare yourself to become a good candidate for a real estate loan. Lenders are much more particular about lending money commercially versus residentially. You need to make sure to convince your chosen lender that they are making a wise decision when they choose to do your financing. Below are some steps that you need to be prepared for when you are applying for a business real estate loan:

How to prepare and get a business real estate loan

1. Have a down payment - In cases of commercial real estate loans the borrower is almost always required to put a percentage of the loan as a down payment. This percentage usually ranges between 10-30%.
2. Have some experience - As it was mentioned earlier, it is harder to get a commercial loan than a residential loan. This is mainly because there are so many more variables in a commercial loan. For example, if you are applying for a loan to build a child care facility, but you have never worked in child care, your lender is going to be hesitant because of the possibility of failure to make enough money to be able to pay off the loan. You need proof that you are going to have positive cash flow.
3. Have a business plan - One of the best things that you can do to show your lender that their money will be safely invested in you is to prepare and present your business plan as well as a detailed property presentation. Instill confidence in your lender that you are a competent business person even if you have not yet started a business.
4. Have a plan for increasing property value - Lenders like to hear if you will be able to increase the value of the property through what you are doing.
5. Multiple lines of income - The main concern of a lender is repayment. The lender feels better about lending you money for your business real estate loan if you have multiple lines of income, or in other words, if you have money coming in from other sources besides through the business you are starting. This way the lender knows that even through you may have a slow start with your business, you will still have the income to pay your payments on time.
6. Present your business plan to multiple lenders - Take the answers to these questions as well as your business plan presentation to multiple lenders to see not only who will approve your business real estate loan request but who will give you the best rate and terms on the loan.

Other tips/conclusion

Of course there will be some documentation that you will be required to fill our during the business real estate loan process. The more prepared you are with the information necessary on these documents, the faster your processing and approval process will be. To give you an idea of how long this process takes, commercial real estate loans can take anywhere from 30 to 60 days to be processed.

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Categories: Business Loans,

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