Loan Options Business Owners Have in Their Hands

Posted on May 29 2017 - 6:14am by Business Day TV

Loan ApplicationRunning a commercial real estate business can be full of challenges, particularly on the financial aspect. When such challenges occur, it is sometimes necessary to seek additional capital from third-party entities. These entities may be lending corporations, government agencies, or even private individuals who wish to invest in your endeavor.

While any of them can be the answer to your capitalization needs, it is also important to examine each one and choose the best option for you.

Lending Firms or Corporations

Many lending firms and corporations are willing to extend loans to qualified commercial real estate businesses. According to experts, lending institutions define commercial real estate businesses as real properties that are used exclusively for business purposes and include retail centers, apartments, office complexes, and hotels.

At present, interest rates offered by lending firms to commercial real estate businesses can be anywhere between five and seven percent. Many of these financial institutions offer 15 and 30 year fixed rate mortgages with Loan To Value ratios of around 65 to 80 percent.

Multifamily Refinance Program

If your commercial real estate business is classified as residential in nature, such as apartments or condominiums, then it is possible to qualify for a multifamily FHA loan. This type of mortgage is insured by the Federal Housing Administration and is designed to help businesses that fall under the multifamily residential category.

You need to file a loan application, which your loan officer will study, taking into account your debt to income ratio. This process is necessary to prevent property owners from getting a loan that they cannot afford. If borrowers have a good credit history and a solid record of timely payments, their chances of getting approved will be higher.

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Venture Capitalist or Private Investors

Another financing option is seeking out venture capitalists or private investors who may be looking for a commercial property to invest in. The only challenge is that there is a long line of individuals waiting to be interviewed and assessed by venture capitalists.

A multifamily residential apartment is a profitable business endeavor, particularly if you are located in a city with many professionals looking for homes. Sometimes, however, the need for additional capitalization that will be used to improve the structure may arise. If you are into this business and you need additional financing, you might want to consider the loan options discussed here.