Easy Commercial Real Estate Loans

Author: Aidan Kellsey

Investors are provided with several loan packages, depending on their business and loan requirements.

Investors are provided with several loan packages, depending on their business and loan requirements. Non-traditional lending companies provide loans for $500,000 to $5,000,000 and give these at considerably reduced interest rates (1%-3%).

The Security Enforced on Loans

Purchasing business premises, expanding business boundaries, developing property and investing in commercial or residential properties are but few of the most common reasons why people apply for business loans. Negotiations on the kind of security attached to the loan are accepted for the sole purpose of letting the borrower take advantage of his/her loan.

Private lenders offer quick and dependable service to those who want to apply for a small or a big loan because they do away with the red tape and unnecessary paperwork that prolongs the loan application procedure.

Banks and other traditional lending firms offer a standard procedure for refinancing and getting a mortgage. However, the value of the collateral and not the borrower?s credit history is the major consideration of lenders when approving commercial loans.

In applying for a commercial loan, you are required to make use of a commercial real estate property as security. It must be in good condition, otherwise lenders will charge you with a bigger downpayment or disqualify you for an apartment loan while they evaluate your application using the loan-to-value ratio.

The Buyer-Seller Transaction

Commercial real estate loans need a buyer-seller relationship. Before one can select an investment property, one must check the available estates for sale to seek out the best property and get top value for one's funds. Sellers have to ensure that their estates are in top condition and the documents are available for reference.

When buying a property, buyers assess its location and condition. Because buyers don?t like to incur more travel expenses when checking on the property and dislike to inconvenience possible customers, they want ease-of-access and less traffic. Good condition is important as the opposite would require added expenses to take care of primary repairs.

The LTV Ratio and Commercial Real Estate Loans

The loan amount is calculated using the loan-to-value (LTV) ratio. This figure is the ratio of the amount of a loan to the appraised value of the property pledged as security. For instance, an estate quoted at $180,000 will give a borrower $150,000 for the loan.

The LTV ratio is indirectly related to the risk of the borrower. This suggests that high risk borrowers, or those with not-so-good credit history, are given lower LTV ratios. In addition, by giving high LTV ratios, lenders are shielded from the pressures of foreclosures. In isolated cases, a full ratio may be awarded to the deserving borrowers.

In general, factors such as the borrower?s credit standing, success and type of the business you are managing and nature of the estate about to be purchased are evaluated by the lenders before approving a commercial loan. The good news is, the NCF has a better way of processing loans as compared to those of the traditional lenders.

About Author

Start investing with low-interest commercial real estate loans, multifamily apartment loans, or mobile home park loans. Visit NationalCommercialFunding.com today and get the loan that's suited for your investment needs.

Article Source: http://www.1888articles.com/author-aidan-kellsey-7550.html


Sarah Q. said...

Interesting post. I want to run a business soon, so I'll keep this post in mind. Becoming, what I hope, an entrepreneur is somewhat new to me, so I can use all the help and advice I can get! I know it'll be tough. Lately I've been thinking about the idea of buying a business instead of starting from scratch. I'm not sure what I should go for. Franchise? Home-based? I don't know. Do you have any suggestions or advice? Thanks!

Eliza Silva said...

@Sarah - Never give up, but don't keep at it if your heart isn't it. That's my advice. It's definitely hard right now, but with enough determination you can still be accomplished. Also, don't forget due diligence! That being said, if you're looking to buy a business, then it's best to know what's even available in your area. There's this site called BizTrader.com, which is this online global marketplace where you can buy or sell a business. If you want, you can even invest in a business. I also suggest checking out any small business groups in your area. They should also know the ins and outs of conducting business where you live, or plan on doing business. Good luck!