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Commercial real estate loan

manatdesk19160745.jpgA commercial real estate loan allows businesses to purchase land, buildings, or other property in order to gain business credit. Commercial real estate loans use the property being bought as collateral against the loan. Unlike the process for home mortgages though, approvals for commercial loans are based on the property you're interested in buying. You'll need a solid business plan in place and careful professional evaluation of the property to receive funding. Small business owners have a great opportunity to acquire a commercial real estate loan and build their business empire.

When buying new property for your business a real estate agent that knows the area as well as the business potential is essential to finding the right location. He should help you evaluate foot and vehicle traffic, zoning regulations, and any previous uses and their success or failure. If previous small businesses have been there in the past, you need to be careful about investing in this property as it has been proven to not become a successful venture.

You'll need to show a business plan convincing your lender that the new property will make money. Detailed financial plans, reports, balance sheets, tax documents and sales records may be required to show the overall health and sustainability of your business. Your business plan is the key to acquiring the loan with a good interest rate and for the best terms. Include the small details in the business loan that include information about how you plan to turn this commercial real estate property into a successful venture. Here are some areas to pay attention to in your small business plan:

  • Development of products and services

  • Marketing and how you plan to gain attention and earn the trust of your target audience

  • Small business financing and cash flow help


There are many lending sources available, but it's important to choose one that will work with you and is reputable. This is an important step in obtaining the right commercial land loan. Look for well established lenders and ask for references from other businesses that have used them. The best lenders will give advice on what to look for in a property to ensure that you've thought out your choices and are well informed. It can be almost impossible to receive a commercial property loan as a new business. In most cases, owners need to plan on renting space for a couple years to establish credit before delving into the world of ownership.

Land loans are available through the Small Business Administration (SBA). They will loan up to $750,000 to enable small businesses approval without large amounts of collateral. This can establish the legitimacy of your business and put you on the path to commercial land ownership in no time. A 1-3-5 plan may also be recommended if you cannot secure a commercial land loan, this includes finding 1 bank to give you a loan, 3 credit cards that you can maintain healthy financial standings on, and 5 vendors willing to work with your company.

A new property will mean a new business plan, detailed with the new expectations for your business once you move into your property. Prepare a detailed analysis of the costs and income you expect in your new space and be sure to include the costs of staffing, maintenance and loans on the new property as well as a contingency plan for any challenges you may face.

If you are financing the commercial property to lease out to other businesses make sure you are seeking small businesses that bring a decent amount of revenue to the area and to your industry.

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