Commercial Loan Factors
There are many factors when taking out a commercial loan. These ventures can be necessary and stressful for seasoned investors, let alone new investors. Our goal is to enable investors and business owners the opportunity to expand their portfolios or take their business to the next level. We can even help when you need to cover unexpected expenses to maintain cash flow to keep your business running during these hard times. While there are many advantages to taking out a mortgage against your business, but it doesn’t go without risk. That being said, choosing the right commercial lender and loan program is critical. To help ensure that you can make sound financial decisions, here are a few things to consider when choosing a commercial loan.
What You Need The Loan For and Your Plan to Repay
To help you make the best decision in terms of the type of loan you need, you should first think about what exactly you need the loan to do for you. In case you missed it, here are the most common reasons business owners take out commercial real estate financing.
How Much Funding Your Goals Require
When it comes to business financing, you want to ensure you borrow enough money to achieve your business goals. However, you don’t want to borrow too much money where you cannot pay back your loan. Instead of tapping as much equity as you can, consider the amount of funding your goals require. You should only borrow the amount that you need to make your goal possible. Knowing how much you need to will also help you make the best decision in terms of what type of loan you need.
Your Commercial Loan Options
When it comes to commercial borrowing, there are so many options to choose from: long-term and short-term loans, fixed vs. adjustable rates, and more. Knowing what you need a loan for and how much money you need to fund your deal will help guide you in choosing the right loan for you. Here are a few common types of loans:
- Bridge Loans
- Real Estate Purchase Loans
- Joint Venture Loans
- Participating Mortgage Loans
- Hard Money Loans
- Short-Term Loans
- & More
Individual lenders offer different types of loans and terms. It’s important to do your research to ensure the lender you choose is the best match for your needs. When looking at your lender options, here are a few things you should consider:
- How quickly do you need the funds?
- What is the length of the loan term?
- What are the available interest rates?
- What collateral is required?
- Is there a big balloon payment?
At Abbey Mortgage & Investments, we take pride in being the go-to source for commercial loans in Colorado. With our direct, in-house loan fund and flexible loan options, we can get you the funds to reach your business goals fast and for the best rates.
Commercial Lending Myths
Are you a small business owner thinking about applying for a loan? If so, you’ve come to the right place. We’re Abbey Mortgage & Investments, and we’re proud to be Colorado’s source for commercial and hard money loans. Our dedicated team will make the entire loan process easy and painless, and we believe that a big part of that is providing the information you need. That’s why we’ve set out to debunk some of the most common myths about commercial loans in this article.
Myth #1. The best and only way to get a commercial Mortgage is through your bank.
Banks are definitely the traditional option for obtaining all kinds of loans, but when it comes to a loan for your small business, a bank is certainly not your only option, and it may not even be your best option. There are many other options available to you for your loan, including hard money lenders who can offer faster approvals and greater flexibility.
Myth #2. Getting a low-interest rate should be your top priority.
Although the interest rate is undoubtedly an essential factor to think about when obtaining a loan, it’s certainly not the only factor. In fact, it may be a better option for you to choose a loan with a higher interest rate if it means that you can get the funding you need with a less-than-perfect credit score, or if you need your loan funded faster than a traditional lender can offer.
Myth #3. You’ll drown in paperwork when you apply for a commercial mortgage.
There’s a misconception that applying for a loan is a long and arduous process. While that may be true when you’re applying through a bank or another traditional lender, you’ll be glad to know that hard money lenders, like Abbey Mortgage & Investments, make the process much simpler.
Myth #4. Commercial lenders are only interested in funding big deals.
Small businesses often operate on a much smaller scale in terms of financing than corporations and large business entities, and many small business owners believe that commercial lenders are only interested in working with big businesses that are involved in big deals. However, many lenders are willing to work with small businesses on smaller deals, and it never hurts to apply!
Myth #5. You’ll be faced with hefty payments, even when business is slow.
When you apply for a loan through a bank or another conventional lender, there’s very little wiggle room in your repayment plan. However, when you apply through a hard money lender, like Abbey Mortgage & Investments, there’s a lot more room for compromising to help you find a repayment plan you’re comfortable.
The truth about loans is that, with the right lender, there’s a strong possibility that you’ll be able to secure an option that meets your needs. And luckily, here in Colorado, you have the experienced lending professionals at Abbey Mortgage & Investments on your side. Contact us today to find the right loan for your small business!
Steps To Getting A Commercial Mortgage Loan
Are you in need of a loan, but aren’t quite sure where to start? Abbey Mortgage and Investments, Inc. can help. We understand that the process of getting a loan can be confusing and frustrating. There is so much jargon that accompanies loan financing, let alone multiple loan options and lenders. It can be difficult to know where to begin. To help you in the process, we have outlined the seven main steps of getting a loan.
Step 1: Understand Your Why & Exit Strategy
Before you jump to filling out loan applications, it is crucial to understand why and what you will use the loan to accomplish. You can research to figure out the right loan for your needs. In the process, you will also learn about all of the various types of loans that are available. Having a good understanding of the purpose of your loan and your plan for paying back a lender will set you up for success when getting a loan.
Step 2: Determine What Type Of Loan You Need
Determining what type of loan you need can seem like a daunting task. If you have determined why you need a loan, as well as your exit strategy, you are well on your way to finding the best mortgage for your needs. Below we have outlined some things to consider when researching different types of loans.
-Real Estate Purchase Loan
-A Joint Venture Loan
-A Participating Mortgage
-Hard Money Loan
Step 3: Research Colorado Commercial Lenders
Once you have an understanding of the need for the loan and what type of loan best suits your business, it’s time to search for the right commercial lender. When it comes to commercial lenders, you do have quite a few options in terms of who will loan you money. You can work with commercial banks, hometown lenders, private or hard money lenders, credit unions, and more. While searching for a Colorado commercial lender, here are a few things to consider:
-Who Has The Best Commercial Investment Rates
For tips on finding the right commercial lender for you, click here for business mortgage tips.
Step 4: Find Out What You Pre-Qualify For
Alright, you’ve found your lender, now it’s time to get pre-approved. Your lender will look at a variety of things, such as the purpose of your loan, financial history, income, debt, and more. Once your lender analyzes your history and income, they will report back to you with how much you pre-qualify.
Step 5: Complete Your Loan Application
After you have been pre-qualified, it’s time to fill out your application. This stage in the process consists of a lot of paperwork and further documentation for your loan officer to review.
Step 6: Send Proposal To Underwriters
After a loan officer has approved your application, the loan package will go to an underwriter. With banks, the loan is ultimately in their hands to either approve or deny your loan. Abbey Mortgage is different. We approve the loans we offer, and we fund them from our cash!
Step 7: Close The Deal
If the underwriters approve your request for the loan, you will undergo a final approval and shortly after the close on your mortgage. (Yay! You made it.)
We hope this blog helps give you a better idea as to what to expect when applying for a loan. If you have any further questions about how to get started or you would like us to review your loan and loan term options for FREE, contact us today. We would be happy to help!
Tips For Finding The Right Commercial Mortgage
Finding the right loan or investment lender can be easier said than done. If you’re looking to take the first step to commercial investing, picking the right commercial lender could feel like a monumental task. It’s essential, but not insurmountable.
Read on for a few tips to consider in your search.
- First, how’s your capital? If it’s low, that says to commercial lenders that it could be a risk lending to you. Make sure you have enough money to invest in commercial property. Do a little research yourself and call if you have questions.
- Do your homework. You’ll want to start looking for the best commercial investment rates possible, and many people begin their hunt online. However, you have the option to work with massive commercial banks, hometown lenders, private or “hard money” lenders, and credit unions, just to name a few. Commercial lenders will need to pull your credit report, process a loan application, and only then can they offer a correct rate.
- In addition to looking for commercial lenders online, ask for referrals from friends and family. Make sure you have several options before you zero in. You’ll need to carefully examine them to determine which one is the smartest financial move. Don’t be afraid to ask lots of questions when you’re interviewing potential commercial lenders. Do they prefer to communicate with clients by phone, text, email, or face to face? How long are standard turnaround times for pre-approval, appraisal, and closing? At the closing, what fees are you responsible for paying? Can those fees be waived or rolled into the investment? What are the requirements for your down payment? An excellent commercial lender wants you to ask lots of questions and should be happy to answer all of them.
- Speaking of questions, there are no stupid questions except for the ones you didn’t ask. The commercial investment process is filled with nearly incomprehensible financial jargon, and you aren’t expected to have a degree in Finance in order to understand everything. Make sure your lender is a skilled enough communicator that they can break everything down in ways that are easy to comprehend.
Commercial Lending Options
Why do business owners and real estate investors need to take out a loan?
To Purchase Colorado Commercial Real Estate
As a business owner or real estate investor, you may need to take out a loan in order to purchase commercial real estate. Commercial real estate is a property that is used for commerce purposes — the buying and selling of goods. Business owners purchase commercial real estate to own the real estate from which their business runs. Commercial real estate investors, on the other hand, buying commercial real estate to rent out to business owners who do not have the means to or do not wish to own their property.
Business owners may look to take out a loan if they are interested in expanding their business. There are many reasons why a company may look to expand. From only needing more space and workforce to increase profits, developing a business can be a great business opportunity — but they need funds.
To Purchase Machinery Or Equipment
Many businesses have equipment that is essential to do the job. Unfortunately, machinery and equipment break, wear out, and become outdated over time — and the business owner must replace it. Machinery and equipment are not often cheap and can be a substantial financial burden to business owners. In this case, business owners can take out a loan to help cover the expenses.
To Purchase Inventory
Merchandise-based companies must first invest in the products they plan on selling before they can make a return. However, keeping up with the demand for your products can be expensive and difficult to manage. Keeping up with inventory expenses can be tough. We have many businesses that will take out a mortgage against their commercial property with us.
To Increase Cash Flow
Running a business is expensive, and cash flow can be challenging, especially for small businesses. There are so many factors that can affect cash flow — customers not paying their bills, excessive inventory, unexpected costs, etc. On top of factors, you can’t control, keeping your lights on and paying your employees can be a struggle on its own. When cash flow is weak, business owners can take out a loan to help keep up with costs and keep their business running until they can make up for their losses and increase their profit.
Are you a business owner looking to take out a loan? Contact Abbey Mortgage to discuss your loan options. We look forward to speaking with you.