Welcome to our blog! Today we are going to dive into Colorado commercial loans and discuss the main reasons why you would need to take out a Colorado commercial loan with Abbey Mortgage. Before we get…Read More
Looking to get a Colorado Commercial Loan?
Colorado Commercial Loans are sometimes slow to be approved or limited in the nature of the property securing the loan. Abbey Mortgage & Investments, your commercial hard money lender, and Lynx can be of value to helping you get your commercial loan closed on a much more timely basis than might otherwise be possible.
Abbey Mortgage & Investments, Inc. can provide access to highly competitive Colorado lenders perfect for long-term commercial financing. Providing a “one – two” punch between Lynx’s fast action to get the transaction to the closing table and Abbey’s access to highly competitive long term funds.
Bridge financing for property acquisition when time is short or your deal is on the line might be the right decision. More traditional lenders like out-of-state banks can’t act as quickly as you need to close. Alternatively, you might end up being cash short, but have found a super deal and have substantial equity in other property. Lynx may be the answer.
Cash out financing of existing Colorado properties, which are on the market, will give you the liquidity you need to close on a new investment.
With terms that are more flexible than some other lenders, Lynx’s Commercial Loans will buy you the time and funds to achieve your goal and expand your portfolio.
Existing Commercial notes, often carried by the seller or other private party are also of interest to Lynx. We will purchase this paper and liberate cash for other uses, usually on a non-recourse basis to the seller.
Commercial Real Estate Loans are almost unfinanceable at the local bank right now. That’s sad because these properties have solid tenants that can often stay for years or even decades. We like well-located properties with good histories and better prospects. On these properties, we will typically require an appraisal and will review it internally. Our primary concern is that our loan is secured with equity for you as the owner still in the game. We design our loan terms to provide positive cash flow to the borrower throughout our loan term until the balloon date, by which time the property will be refinanced or sold by you. Typically up to a 20-year amortization and a 2 or 3-year term to the balloon date.
Contact us today for more information on Commercial Real Estate Loans and other asset based lending opportunities.
What is a Commercial Loan?
A commercial loan is a funding arrangement that is debt-based, arranged between a financial institution and a business. For the most part, this type of loan is used to fund capital expenditures or operational costs that need to be covered. This is a good option for businesses that otherwise can not afford these endeavours on their own.
Due to the economy, expensive starting out costs, and regulations that cause roadblocks, often small businesses will find themselves having a hard time getting access to equity markets for financing. This leads to these businesses having to rely on lending products, such as a line of credit, term loans, or unsecured loans in order to make strides in moving their business forward.
Understanding Commercial Loans
There are a number of reasons a commercial loan could be needed by a variety or business entities. For the most part, these loans are providing in order to aid with short-term funding. This funding could be needed for operation costs or purchasing equipment to assist in the business’ operations. Additionally, these loans can sometimes be used to provide for even basic operational necessities like funding for payroll or purchasing small supplies that can aid in manufacturing and production.
Mortgage Loans – Individual vs. Entities
For the most part, residential mortgages are made to borrowers on an individual basis. Commercial real estate loans, on the other hand, are made to corporations, developers, partnerships, fund, trusts, or other business entities. It is likely that this commercial real estate is planned on being used by the entity for a specific purpose.
In many cases, the entity may be new and therefore have no financial track record. This often leads to principals or owners of the entity to step up in order to guarantee the loan. The lender will then have a credit history and a person from which they can recover the funds from in the event of a loan default.
Renewable Commercial Loans
For the most part, people think of commercial loans as a short-term source of funds for a business. Conversely, some banks and other financial institutions will offer a renewable loan from time to time. In instances like this, a business can get the funds that are required to maintain the operations necessary. They can then repay the loan within a certain time period which is determined by the lending entity. Once this period has passed, there may be a need for an additional or renewed loan period depending on each individual situation.
Much of the time, commercial loans have restrictions when it comes to the prepayment structure, if there is one at all. This has a lot to do the amount of yield on the loan that can be anticipated from the lender. If those who are investing settle a debt before the loan has reached its maturity date, it’s likely that there will be penalties that will have to be recovered on the prepayment. The following are the four main types of penalties for paying off a loan early:
When it comes to this type of penalty, it is is calculated by multiplying the current sum that is owed in remaining balance by a prepayment penalty that has been specified ahead of time.
This is a different type of prepayment penalty. In cases like this, the lender is entitled to a specific amount of interest that has already been determined. This applies even if the loan is paid off ahead of time.
In a lockout instance, the borrowed can’t pay the loan off before a period that has already been specified.
This is a replacement for collateral. Rather than paying cash to the lender, the person who is borrowing the money exchanges new collateral, normally in treasury securities) in exchange for the original loan collateral. Much of the time, there are high penalties that are attached to this method of paying a loan off.
In every prepayment situation, there are terms that are identified when the loan documents are first drawn up. These can be negotiated along with the rest of the terms in commercial loans. It is important that the options available are understood ahead of time, as well as evaluated before a loan is paid off ahead of time.
When it comes to commercial loans, there is a typical range of five to twenty years, which a amortization period being longer than the term of the loan as a whole. Some lenders could make a commercial loan with a term of six years, that has a separate amortization period of 25 years. If this were the case, the investor would be able to pay on the loan for six years but with the amount they are paying being based off a loan period of 25 years. At the end of the six years, there would be one large payment that would cover the remaining balance.
Depending on the length of the loan term and the amount of time allotted by the amortization period, the rate charged by the lender would be adjusted. If the investor has strong credits, the terms of this agreement may be able to be negotiated. Overall, the longer the schedule for loan repayment is, the higher the interest rate attached to it will be.
Getting a Commercial Loan
If you are a creditworthy applicant, getting a commercial loan, just as any other type of loan, will be the most important aspect. You should have the proper documentation if you are eager to get your funding from a financial institution such as Abbey Mortgage and Investments. If you are interested in learning more about commercial loans, or you would simply like to have some questions answered, feel free to contact us today. We have been in the business long enough to know what you should and should not do in order to be successful. Additionally, we would be happy to help you begin your process and potential assist you further in your endeavor.