How to get quick financing on commercial properties

Purchasing property is a big commitment for a small business, and often, the financing is done with a commercial real estate loan through a bank or commercial lender. The team at Appro & Cerron has some useful information to help business owners through this process of getting quick financing on your commercial property. Obtaining a commercial loan is similar to obtaining a home mortgage. Depending on the lending source, there are many requirements and early steps your business must prepare before acquiring the financing from a lending source. There are also many options for obtaining a loan, for which we will explain the pros and cons for each to help determine what will be the best fit for your business’s finances.

How to prepare

Lenders tend to look over three things when determining to grant your business a loan. First, they are going to look at your business’s finances to make sure you that your business has the cash flow necessary to repay the loan. Second, lenders will also tend to look at the personal finances of the owner, mainly just checking credit history to see if there have been any problems in the past. Third and finally, the lender will also review the value of the property and attach a lien to the property as collateral, if you fail to repay the loan on time.

As you prepare to meet with a lender, in general, the following is list of things lenders will require of you and which you should prepare for your meeting:

  • Up to five years of tax returns
  • Books, records, and financial reports for up to the last five years
  • Projected cash flows for life of the loan
  • Credit score checks and personal finances of owners and managers in the company
  • A third-party appraisal for the loan
  • Business plan showing how the property will be used, and sometimes an explanation of the business’s management expertise and commitment

It can be a challenge for borrowers with poor credit to receive commercial loans; and while not impossible,  they may be required to pay a higher interest rate.

interest rates - financing for commercial propertiesWhere to find a commercial real estate loan

There are two common sources that many businesses choose to get their loan from. If you, the borrower, plan to purchase investment property, considering a loan from a bank would be a good option for you.

  • Regional and national banks offer big loans, compared to where a local bank would go up to $1 million for a loan
  • Banks will offer you the best rates compared to to other sources (e.g. 3%-14%), and there is the possibility of synergies with other accounts
  • The downside of banks is that they require the most documentation which makes the process slow.

If you are a small to medium-sized business, a commercial lender might be a better fit for you.

  • Commercial lenders have a faster approval than banks because of the less rigid underwriting standards they have.
  • The big downside is that their interest rates are higher than banks and they may require a balloon payment in 5 to 10 years.

Small businesses with bad credit tend to face limited options when finding commercial real estate financing, so one consideration is hard money lenders. They care more about the value of the property financed, and less about the borrower’s credit score. Most hard money lenders can close a loan quickly compared to bank or commercial lender, which is good for purchasing property quickly. The drawback is that the interest rates and down payments will be higher because the hard money lenders evaluate the value of the property more so than the borrower. If you are a borrower with good credit, an SBA 504 loan would a great option to investigate. This loan program is also open to new and existing businesses, but it will require a higher down payment than other more widely utilized options.

Some SBA 504 loan features include:

  • The loan is divided between a bank and SBA approved certified development company. They would both work together in issuing your loan.
  • Bank loan: 50%, CDC loan: 40%
  • A low down payment of 10%, and offering 10-25 year terms with low interest rates.

It is important to shop around so your company can get the best loan offer possible. Receiving multiple offers and reviewing the fine print would be advised, and possibly bringing in a third party to look over the financial part of the contracts being offered. The amount of time to acquire the financing will vary with what source best fits your company.

We hope that this content will give a better understanding on where to get quick financing for commercial real estate. Appro Development & Cerron Properties would like to remind all our customers how grateful we are for your business and support.

If you enjoyed this article, you may also find the following related articles and links helpful:

You may also want to download a Financing Checklist:

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 Image Credits: Image of hands with money via Freepik (jcomp) and interest rate blocks via Freepik (d3images)

Data Source: https://www.valuepenguin.com/small-business/best-commercial-real-estate-loans 

 Disclaimer: Appro Development, Inc. and Cerron Commercial Properties, LLC have compiled the above information from multiple sources and make no warranty or representation regarding the information shared above. You and your tax, and/or legal adviser(s) should conduct your own investigation and research regarding the best financial options for you and your unique business.

Top Five Property Solutions Backpack Tools

Top Five “Property Solutions Backpack” Must Have Tools

We would all agree that having the right tools can make a world of difference. We would like to share some “must haves” for your “Property Solutions Backpack”.

Over the years, what we keep in our property solutions backpack certainly has changed over time. As we transition from pencil and paper to desktop software to cloud-based solutions we take with us on the go. Our team is excited to share a variety of tools you may find helpful to your business as you consider your space needs.

Continue to read to learn more about:

  • Tools we use to get our job done
  • Tools we share with our clients
  • Tools you might want to use to keep your team organized and on track


Property Solutions Backpack by APPRO and CERRON

Whether you are the “freshman” just jumping in, or the “big guy” on campus, these Top Five Tools will be helpful for each of you:

  1. Notebook – new building owners who work with our team receive a 3-ring binder or “notebook” upon completion of a project. Inside, we include warranty information, copies of plans and other details about the building, and how to get in touch with our team. If we didn’t build your building, do you keep all of this information in an easily accessible location? If not, it 
  2. Data – if you are a tenant, owner or landlord, by understanding the details of your property location, you know more about your potential clients, neighbors, and possibly your competition. Did you know you may order a FREE demographics report on your location from our team? We typically pull this report when working on a new real estate listing, but we would be happy to pull a report at any time to help you understand more about your property’s location. Did you know you can also check out an area of interest with an app on your smart phone called “Sitegeist”? It isn’t as detailed as our demographics report, but could get you some of the details you need when exploring a new location.
  3. Checklists – we all make them, and some people live to make them just to see the items checked off. Did you know that we have a “Commercial Building Maintenance” checklist on our website? Also, if you REALLY love checklists, here is one more tip – if you don’t already have the Evernote app on your desktop and/or smartphone, you should! Having your checklists available in the palm of your hand, or accessible on any device, is a true time saver!!
  4. Calculator – Curious to know how to calculate how much space you need? Or, need to figure out just how much a change in rate would impact your purchase power? We offer a Space Calculator and a Mortgage Calculator (found on the main page – left side in tools) on our website to help answer these questions.
  5. Ruler – Every backpack needs a ruler. Do you know how to read a blueprint? Having an architect’s or engineer’s ruler helps to convert scale from say 1/8” or 1/4”. If you would like to request a free scale, email us and let us know if you prefer architectural or engineering style in the comments field.

You might also have interest in these links:

Property Improvement Opportunities

Property Improvements – Tax Savings

Financing Commercial Real Estate 

Financing Checklist

We hope you enjoyed learning about these tools. If you are in need of additional Property Solutions assistance, please don’t hesitate to contact our team – we are here to help!

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Commercial Property Tips: 13 Spooktacular Ideas for Non-Creepy Spaces

13 Commercial Property Tips for Non-Creepy Spaces

 

APPRO and CERRON commercial property tips for non-spooky buildings “Spooky Moon” Source: rcbodden via Flickr

Our team would like to share some fun commercial property solution ideas to keep your space from being creepy (BEWARE: this blog post contains many links to helpful resources – you may need to hover your cursor over to see the link and a description will “magically” appear – only a little spooky, right!?):

  1. Clear out the spiders and cobwebs to make your space enchanting. We team up with the best subcontractors in the industry, including commercial cleaners & landscapers.
  2. If your parking lot is looking more like a graveyard, than a welcome space for your employees and visitors, it might be time to consider an exterior update. We hire the best Project Managers in the Midwest who oversee our remodel, expansion and new building projects.
  3. If your employees are looking more and more like zombies because their workspace needs changing, you may want to consider a possible remodel. Our design team can plan out ideal space configurations for your workplace.
  4. If you encounter monsters on your drive into work, you may want to consider moving your business to a different location. CERRON Commercial Properties – our website includes ALL Minnesota commercial properties*!
  5. Does the thought of finding a new space feel a little scary? A new lease space is waiting for you.
  6. Afraid of the Dark? Shed some light on your office, retail or industrial spaces by implementing new lighting and/or design options. Our award-winning Architect has the perfect solution.
  7. Are ghosts and tumbleweeds the only things passing by your retail space for lease or sale? The CERRON team can connect you with some live prospects.
  8. Wondering if it is time to sell your space, but the cat’s got your tongue. Get a quick, easy, and free market analysis.
  9. Do you find the prospect of financing a new project downright hair-raising? Clear, solid financing options are available.
  10. Face the skeletons in the closet and tackle building maintenance. Use our annual maintenance checklist.
  11. Looking for the perfect potion for configuring space or calculating financing? Easy estimating tools (space & mortgage calculators) are bubbling up in our cauldron.
  12. Are your employees howling for more space? APPRO can fast track a new building for your favorite werewolves.
  13. Finding vampires everywhere you go? Might be time to consider working with our friendly, (non-blood-thirsty) APPRO and CERRON team.

 

Wishing you and your team a very Happy Halloween!

“Orange” you going to consider sharing this? We sure would love it if you did!