How to Qualify for A Commercial Real Estate Loan

In this brief write-up you will learn the basic ins and outs in regards to a commercial real estate loan. We will primarily cover the different institutions that are available to you; we will also cover different payment methods as well.

The transition from an online business to having a physical location is a very daunting task. One problem that many business owners run into besides finding the right location is finding the money they need. This article will help you with the basics of getting your loan.

You want to make sure you look in different places before you commit to an institution. Basically, when it comes down to it, you have four options; large banks, small community banks, life insurance companies and private hard money lenders.

When it comes to going the bank route, you have two options large banks--we’ll use the Bank of America as an example--or a smaller local bank in your city. Most bigger banks have a minimum and maximum loan amount. The Bank of America has a maximum of $2 million, but will make exceptions for higher amounts if certain criteria are met. Adversely if you are applying for a commercial real estate loan with a smaller bank you do not want to go that high. You should always do your research with the local bank in your city, and be sure to compare all the features thoroughly.

You have to weigh all of your options when looking for a commercial real estate loan

The other two options you have are life insurance agencies and private hard money lenders. Life insurance companies have pretty good rates, however, they tend to grant loans to businesses that are in good locations. Private hard money lenders outsource a lot of the money used from investors. This method of getting a loan is usually the fastest, however, the interest rates are a little higher than banks and life insurance companies.

Qualifying for and paying off your commercial real estate loan.

Now that you know where you could apply for a commercial real estate loan, you are probably asking yourself, what do I need to qualify? Having a plan on what you want to accomplish with your business is key. Make sure before you go into your consultation you have a concise and clear business plan. For some companies, a solid business plan will be enough to get you the loan that you are seeking.

So you have figured out what lender you are going to go with, and you have a clear plan on the business that you are trying to your potential lender. Your lender has taken an interest in your proposal and is looking to go forward with your commercialreal estate loan. The next thing you have to decide on is how you want to pay back your loan. You have two options when it comes to this: an interest rate reset or a balloon payment.

With an interest rate reset payment plan for the initial years of your loan you have a fixed interest rate. After that period is over the rate can decrease or increase depending on the economy. In regards to a balloon payment over a time period, the debt that you owe gradually reduces over time. After the initial years, you have to pay a lump sum of the remaining balance.

Now that you have the basics, you should feel confident in getting your first commercial real estate loan, giving your business a physical location.

Dennis Dahlberg Broker/RI/CEO/MLO

Level 4 Funding LLC
Arizona Tel:  (623) 582-4444 
Texas Tel:      (512) 516-1177 
Dennis@level4funding.com
www.Level4Funding.com

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave |Austin | Texas | 78701    

   

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.