Two Tips To Help Your Small Business Get A Commercial Mortgage

Posted on: 21 June 2016

If you're the owner of a small business that's looking to stop leasing office space, a commercial mortgage is the way to go.  However, you may find that the requirements for a commercial mortgage are more stringent than the residential mortgage process.  Commercial mortgage loans aren't typically backed by a governmental agency, so commercial mortgage lenders tend to be a bit more strict when they're considering whether or not to loan money to a business.  Use this information to learn more about what you can do to increase the chances that your small business will get the commercial mortgage that you're looking for.

Have A Realistic Business Plan

Purchasing a piece of commercial real estate means that you're looking to be in business for the long haul.  However, you have to be able to adequately document the direction that you're taking your business into with a solid business plan.

The business plan is so important that you may even want to enlist the help of a real estate attorney to help you draft it.  The plan should cover past, present and future.  That is, it should list in detail how your business started, what money you used to start it with and should document the profits and losses that you've experienced each year.  

In addition, the business plan should show an eye toward growth by showing how you plan to expand the business.  Lenders know that the economy hits highs and lows, so they need to see that you have a realistic plan in place to weather the tides so that you'll be able to repay the funds that they loan you.

Have A Solid Set Of Investors

Having a solid set of investors is another way to increase the chances of you getting a commercial mortgage loan.  If you have people who believe in your business enough to risk investing in it, this may instill confidence in the lender.

It's vital to have strong investors because many commercial mortgages comes with a large balloon payment.  When the time comes around to pay the balloon payment, you may find that you're in a loss period.  The lender may then have to foreclose on the property and take a loss if a buyer wins a low bid.

Investors with clear access to emergency capital shows the lender that even if business is slow, you have resources to help with get your balloon payment together.

Getting a commercial mortgage is a critical step in your overall business journey.  Start using these tips right away so you can get the loan as soon as possible.