Commercial real estate loans are used to purchase, construct or renovate commercial property. This can include office buildings, multi-family apartment buildings, medical facilities, warehouses or hotels. 아파트담보대출
These loans are typically more complex than traditional home loans and can be difficult to obtain. They require more financial paperwork and scrutiny of the creditworthiness of borrowers.
What is a Commercial Real Estate Loan?
A commercial real estate loan is a type of debt financing for property that’s used for business purposes. Borrowers can be individuals (including small business owners), corporations or developers. They can use CRE loans to purchase, finance construction or refinance commercial property including office buildings, multi-family rental properties, warehouses, hotels and even vacant land that’ll be built upon later.
Lenders are typically incentivized to offer commercial property loans because they provide revenue streams from rent and other payments made by tenants. This helps lenders offset the increased risk of lending to a commercial property borrower compared to a personal mortgage.
Because of the added risk, borrowers will need to demonstrate their creditworthiness and have an established, successful business to qualify for a commercial real estate loan. They’ll also need to prepare extensive documentation such as federal tax returns, personal financial statements and historical income and expenses for the commercial property being financed. In addition, some lenders may require a personal guarantee in case the business fails to make the loan payments or liquidate collateral to cover them.
What Are the Requirements for a Commercial Real Estate Loan?
Commercial real estate loans are typically used to buy, build or refinance non-owner-occupied properties like office buildings, apartment buildings, medical facilities, warehouses and hotels. They can also be used to purchase land on which these types of properties will be built.
Because commercial property investments are often considered more risky than residential investments, securing a commercial real estate loan will require more extensive documentation and stringent credit requirements. You’ll need to be able to demonstrate that you have an established and successful business and that your company can generate enough cash flow to cover the mortgage payment. In most cases, lenders will also want to see a strong debt-service coverage ratio (DSCR) of 1.25 or higher.
You should be prepared to submit extensive documentation, including financial statements and tax returns, to prove your ability to repay the loan. It’s also important to evaluate the different lender offerings and compare loan programs to ensure you’re getting the best terms and rates.
How Do I Qualify for a Commercial Real Estate Loan?
If you’re preparing to purchase an existing commercial property or construct a new one, you need to meet a few requirements. For example, most lenders require that the property be owner-occupied. This means your business must physically occupy and operate out of the majority of the space. This helps lenders avoid a risky investment that they could lose by lending to non-operating businesses.
Typically, your business must demonstrate that it can generate enough income to cover the loan payments, and this is called your debt service coverage ratio (DSCR). Lenders prefer a higher DSCR for commercial real estate loans because these investments carry more risk.
Traditional commercial mortgages are structured much like home loans, with a down payment and good credit required to qualify. Other types of commercial loans are also available, such as the Small Business Administration’s 7(a) loan, which is designed for newer businesses with less financial history and requires a smaller down payment.
How Do I Find the Best Commercial Real Estate Loan for My Business?
Whether you’re looking to buy, build or renovate commercial real estate for your business, it’s important to find the best lender for your needs. You want to look for lenders that offer the type of commercial loan you need, with rates that make sense for your budget and qualification requirements you can meet.
For example, PNC bank offers commercial real estate loans that range in size from $25,000 to $15 million. However, their terms and conditions require you to have stable revenue and at least three years in business. And you’ll likely need to own at least 51 percent of the underlying property.
Miami, FL-based GoKapital is another commercial lender that offers loans for a wide variety of property types, including industrial, retail and office buildings. It claims to offer flexible loan amounts and terms, as well as a fast approval process. But you’ll need to submit your personal and business credit scores, revenue data and other documentation before completing a loan application.