Commercial Real Estate Loans Fundamentals
A number of small businesses can be operated from home. But for some, production and other business
operations require bigger facilities and buildings. If you feel that there is a need for you to expand and
purchasing a commercial facility is the best option, you can always apply for a commercial real estate loan. Most
business owners go down this route when time comes that their ventures require buying estate properties for
commercial purposes. If you want to know more about this type of loans, then read on.
As the name suggests, a commercial real estate loans is a type of loan specifically structured to enable
borrowers to purchase a piece of estate for the sole purpose of improving and developing their business. Funds
secured through a commercial real estate financing scheme are usually used to purchase the following:
· Existing commercial buildings and production facilities like factories and plants
· Tracts of land which will be developed for agro-commercial production of agricultural products
· Pieces of real estate which will be developed into malls and other commercial structures
· Purchase of apartments and motels.
Most traditional banks offer loan packages for those who want buy properties for commercial purposes. That
means if you need to apply for such a loan, you might not need to go far to get the financing that you need. Once
you decide to get a loan through a bank, make sure you meet their requirements.
For most commercial banks, their requirements consist of the following:
· Documentation that proves business has been established and running for 2 years or more
· Copy of the Contract of Purchase duly signed by you and the owner of the building you wish to purchase
· Copy of the most recent tax assessment of the building or facility
· Assessment from a federally recognized estate property appraiser
· If requested loan amount is more than $100,000, banks require the following
o Financial statements of the business for the past two years as well as personal financial statements, including
o Owners of the business who have at least 20% ownership are required to guarantee the loan.
Banks and lending institutions vary in their prerequisites and loan policies so it is best that you check out at least
3 to 5 banks before settling with one whom you think you are comfortable doing business with. A commercial
estate loan is a big financial risk but a rewarding one at that if handled and managed properly. Talk to your bank
and know more about commercial estate loans.