Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources

Businesses often buy real estate to further the interests of their companies. In order to obtain that real estate most firms need the help of a lending institution – they need a commercial mortgage. If your company is considering a commercial loan, here are four important things you need to know.

What Can You Use a Commercial Mortgage For?

A commercial mortgage can obviously be used to purchase a piece of property for use by the business, most often the office building or warehouse where the company operates. These types of loans can also be used to refinance existing loans on commercial real estate as well as provide extra funds to make improvements to the company property.

Who Makes Commercial Mortgage?

Banks and other lenders are the primary originators of commercial mortgages. While investors often buy up those mortgages later as securities and government agencies like Fannie Mae and Freddie Mac guarantee some commercial loans, banks are the ones that actually originate the mortgages.

How Do You Qualify for a Commercial Mortgage?

Lenders will look at your business credit score to determine your credit worthiness. They will also calculate the debt service coverage ratio for the property. That is the monthly income the property generates divided by the monthly mortgage payment. Lenders want that ratio to be at least 1.1.

What Are the Terms?

Commercial mortgages typically must be repaid within five to ten years. Loans that are specifically for property improvements may need to be repaid even sooner. Some commercial loans have prepayment penalties – a fine for paying of the loan early. They can also sometimes require origination fees and closing costs and sometimes there are other exit fees that are due when the loan closes, so check the fine print before you sign.

With a little research and preparation, a commercial loan can be the right solution to your companies real estate needs.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources