This real estate mortgage report is designed to help educate new commercial investors about important business finance loan issues. Since more investors are exploring commercial real estate and business loan opportunities, it is vital that they have an early introduction to the many critical differences between residential real estate investing and commercial real estate and business opportunity investing.
SBA Loan Refinance and Business Finance Issues
Refinance requirements for business opportunity financing and a commercial real estate loan will usually be more difficult than the commercial loan for initial purchase. This is particularly evident with SBA loan refinancing. It is important to explore these likely refinancing problems before proceeding with any commercial real estate financing or business loan.
Business Finance Loan and Real Estate Mortgage Problems
A commercial mortgage has more potential difficulties in comparison to residential real estate mortgages. This effects the time consumed in finalizing even straightforward business finance scenarios. It is critical to anticipate and eliminate business opportunity financing and business loan problems that recur regularly.
Commercial Mortgage and Business Opportunity Experience
A lack of experience can result in significant damages to the loan process, and there is currently an excessive number of ineffective commercial lenders and business finance advisors. This has resulted in part from the cyclical problems evident with residential real estate financing. Almost all residential mortgage brokers are seeking to replace vanishing residential loan income with commercial real estate loan business, but in reality they are serving as commercial mortgage advisors without basic business loan capabilities.
Time to Finalize a Business Opportunity Loan or Commercial Mortgage
Regional and local banks will frequently have an extensive business loan process that can consume nine months or more. Non-traditional business finance requirements can be completed more efficiently than with a traditional commercial lender but the process will still be several longer than a typical residential real estate loan. The use of SBA loan and specialized commercial mortgage programs can increase the complexity and time frame for completion of business financing.
Expected Business Loan and Business Opportunity Financing Fees
A more expensive fee structure is likely for business financing and business opportunity financing because it is more time-consuming and extensive than residential real estate finance requirements. The use of commercial real estate loan retainer fees are more common than with residential mortgage financing. The business loan process routinely includes third-party fees that contribute to costs such as environmental and appraisal fees.
Commercial Real Estate Loan for Special Purpose Property Situations
Commercial mortgage scenarios for specialized properties such as gas stations, churches, golf courses and funeral homes result in complications not witnessed with residential real estate financing. Specialized commercial property loans have been eliminated from an expanding group of business finance portfolios by business lenders. As a result of fewer lending options together with specialized business loan issues, church financing, funeral home financing and golf course financing are among the most problematic business opportunity finance or commercial loan situations.
Additional Real Estate and Business Finance Differences
The commercial mortgage and business loan process in the United States has many factors distinguishing it from residential real estate financing. Many significant topics not described in this discussion are explained in several other business finance reports. Some of the topics covered in separate reports are personal guarantor requirements, lender suitability criteria, business opportunity finance and SBA loan financing.