Over 627,000 new businesses are started every day in the United States.
Expanding your business is a large task financially, so most new business owners need help getting started. If you’re looking to expand your business to a building, keep reading to learn more about commercial real estate loans!
What Are Commercial Real Estate Loans?
A piece of commercial real estate is one that offers a service in order to make money back.
For example, malls, grocery stores, and hotels are considered commercial real estate. The building or buying of commercial property can be a pretty big investment, so most people rely on a commercial real estate loan to fund the property.
Where Should You Get a Commercial Real Estate Loan From?
If you’re ready to build your business, it’s time to start searching for a source for your commercial real estate loan.
There are a few different options you have when choosing commercial real estate loans. These are:
- Your bank
- An independent lender
- Insurance companies
- Pension funds
- The U.S. Small Business Administration
Each source offers different options for loans, so you’ll need to weigh the pros and cons of each. Many borrowers prefer an independent lender because they feel that they have more loan options.
How Can You Qualify for a Commercial Real Estate Loan?
There are certain qualities a lender will look for before giving you a commercial real estate loan.
These are:
1. The Building is Owner-Occupied
If you’re taking out a commercial real estate loan for your business, you need to be occupying over half of the building.
So, if you’re buying the building to share with other businesses, you must have at least 51% of it as your space. If you’re looking to buy an office space in a large commercial building, your lender may not fund that as you probably won’t take up enough space.
2. You’re Bringing in Enough Money
Your lender is going to want to know that you’re bringing in enough money to pay back your loan.
Some businesses struggle to pay back funds if their business doesn’t bring in the revenue they were expecting. This makes lenders cautious about lending to business owners. To get a loan approved, you’ll also need to keep your earnings on file and show them to your lender.
To make this process easier, keep your finances organized in one place where they’re easy to read.
3. You Have a Solid Credit History
Aside from your business history, your lender will want to know your credit history.
If you have co-owners, your lender will want to check their credit scores, as well as yours. A low credit score may signal to the lender that you don’t make payments on time.
Proving a good credit score is essential for getting a commercial real estate loan.
Are You Ready to Take Out a Loan for Your Business?
If you’re ready to expand your business, it’s time to think about commercial real estate loans.
Buying or building a space for your business expansion is a pretty expensive task, so don’t try to do it alone. To learn more about the commercial real estate loans that we offer, reach out to us today!