5 Tips to Find the Right Commercial Real Estate Loan

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Wednesday, December 6th, 2017

If you thought that getting the right residential mortgage was challenging, then we have some bad news and good news for you. The bad news is that compared to finding the right commercial real estate loan, hunting for the right residential mortgage can seem like a proverbial picnic.

Now for the good news: if you’re armed with accurate information and steer clear of prospective lenders that specialize in over-promising and under-delivering, then you can count on getting the financing you need to strengthen your business for decades to come.

To that successful end, here are 5 tips to help you find the right commercial real estate loan:

1. Make sure you understand the processing time.

Many lenders claim to process a commercial real estate loan application in “30 days” (or some other agreeable duration), but then wind-up taking months to seal the deal. Make sure that you get a firm commitment regarding the realistic processing time, and not an exaggerated quote.

2. Explore all of your options.

Typically, your search for the right commercial real estate loan will include various banks — big, medium and/or small. However, you should also explore what’s available in the alternative lending marketplace, so that you have a complete picture of your options. Compared to banks, firms in the alternative lending marketplace are usually much more flexible in terms of application requirements, and the processing time is much faster. What’s more, you can completely ignore the myth that the “safest” lender is one that is geographically close to you. You can and should look nationwide!

3. Have a robust plan for using the loan.

You’ll save yourself time and money — plus increase your negotiating leverage with prospective lenders — if you’re prepared with a robust plan for how you’ll use the commercial real estate loan, and why the investment makes smart business sense. Also ensure that your plan includes a timeframe for when you anticipate the project coming to an end.

4. Review your balance sheet.

Once your property is purchased or built, you certainly don’t want to run out of cash — because that will force you into an untenable situation: either you default on the loan and continue operating the property, or you continue servicing the loan and cannot run the property (or at least, not in a way that maximizes its income-generating potential). By reviewing your balance sheet ahead of time, you’ll be able to see whether it makes sense to augment your reserves with a working capital loan and/or have a business line of credit available just in case.  

5. Don’t underestimate the importance of a good relationship with your lender.

Last but certainly not least: a commercial real estate loan isn’t like purchasing a typical product or service for your business. It’s a long-term relationship, and you want to know that your lender will consistently lean forward and help you maximize value — and minimize costs — well after the deal is signed and sealed.

Learn More

At National Business Capital, we proudly provide commercial real estate loans to businesses across the country — from small firms to large organizations. To learn more, contact us today or fill out our two-minute application. Your consultation is free, and we’re here for you 24/7/365.

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