Common Commercial and Business Loans

Commercial loans cover a wide assortment of projects. If you can name it, there is probably a loan designed just for your business needs somewhere. Many business needs fall into more or less common categories, making it simpler to find a commercial loan already tailored to your needs. Here are some of the more common commercial loans with some of the details about each.

Commercial Bridge Loans

A commercial bridge loan is needed when you are in the process of either building a new building, or, just buying another one, but have not yet sold the old one. This creates tight finances for most organizations, but a commercial bridge loan is designed to fill in the gap and supply the money needed on a short-term basis. Afterwards, you simply refinance it with either the same lender or you can get another.

The terms that you might expect to find on a commercial bridge loan would be for short terms - possibly up to two years. Oftentimes, you will simply be paying the interest, and there will usually not be any prepayment penalty. Because the lender is looking for it to be a short-term loan, its amortization is calculated on a 25 or 30-year term basis. They will definitely want to know that there are clear plans to purchase the property that the bridge plan is to be used for.

The amount that you can borrow will vary with the lender, but you might find that many will not lend more than 75% Loan To Value (LTV). A commercial bridge loan can be used on just about any type of commercial property, including apartments, shopping centers, office complexes, restaurants, industrial, hotels, health care facilities, and more.

Apartment Building Loans

As long as the prospects look good to the lender, you can most likely get a better deal on an apartment building, than you can with any other type of commercial loans. The primary reason for this is that it is generally believed to be a more stable investment for the lender than either an office building or other commercial enterprise. It is considered an even wiser investment to the lender if the owner is actually living in the building that is being financed. The obvious reason here being that the lender knows that the owner will not only lose their investment if they fail to make the payments, but will also lose their home.

Commercial loans for apartment buildings are available for both stated income and full documentation loans. Of course, much smaller amounts are available for the stated income loans - up to $2,000,000 in some cases. These loans are often available for longer terms than other commercial loans, possibly up to 30 years, or more. They can be obtained in either forms - fixed rate or adjustable rate mortgages, and there may be a penalty for prepayment if amortized in less than ten years, and it could be as much as 10% for the first year. Financing for apartment buildings could be up to 75% LTV, if it is to be owner occupied and is already receiving a steady rent income. Lower interest rates are available for a greater

Common Commercial and Business Loans

Commercial loans cover a wide assortment of projects. If you can name it, there is probably a loan designed just for your business needs somewhere. Many business needs fall into more or less common categories, making it simpler to find a commercial loan already tailored to your needs. Here are some of the more common commercial loans with some of the details about each.

Commercial Bridge Loans

A commercial bridge loan is needed when you are in the process of either building a new building, or, just buying another one, but have not yet sold the old one. This creates tight finances for most organizations, but a commercial bridge loan is designed to fill in the gap and supply the money needed on a short-term basis. Afterwards, you simply refinance it with either the same lender or you can get another.

The terms that you might expect to find on a commercial bridge loan would be for short terms - possibly up to two years. Oftentimes, you will simply be paying the interest, and there will usually not be any prepayment penalty. Because the lender is looking for it to be a short-term loan, its amortization is calculated on a 25 or 30-year term basis. They will definitely want to know that there are clear plans to purchase the property that the bridge plan is to be used for.

The amount that you can borrow will vary with the lender, but you might find that many will not lend more than 75% Loan To Value (LTV). A commercial bridge loan can be used on just about any type of commercial property, including apartments, shopping centers, office complexes, restaurants, industrial, hotels, health care facilities, and more.

Apartment Building Loans

As long as the prospects look good to the lender, you can most likely get a better deal on an apartment building, than you can with any other type of commercial loans. The primary reason for this is that it is generally believed to be a more stable investment for the lender than either an office building or other commercial enterprise. It is considered an even wiser investment to the lender if the owner is actually living in the building that is being financed. The obvious reason here being that the lender knows that the owner will not only lose their investment if they fail to make the payments, but will also lose their home.

Commercial loans for apartment buildings are available for both stated income and full documentation loans. Of course, much smaller amounts are available for the stated income loans - up to $2,000,000 in some cases. These loans are often available for longer terms than other commercial loans, possibly up to 30 years, or more. They can be obtained in either forms - fixed rate or adjustable rate mortgages, and there may be a penalty for prepayment if amortized in less than ten years, and it could be as much as 10% for the first year. Financing for apartment buildings could be up to 75% LTV, if it is to be owner occupied and is already receiving a steady rent income. Lower interest rates are available for a greater down payment, and better interest rates are given to apartment buildings than to other commercial enterprises.

Multi-Family Unit Loans

If you are looking to buy a multi-family unit with more than five units in it, you will discover that the loan amount changes somewhat with the smaller building. For buildings that are smaller than 5 units, they are simply considered as residential buildings. Now, you may borrow about 75% (possibly up to 80%) of the LTV, instead of the 75% on a large apartment building. This is partly due to the fact that you will often have at least one apartment empty, which could result in a higher percentage of loss of income. Large apartment buildings, on the other hand, have a better Return Of Investment (ROI) than a smaller unit would have, and a lender can expect it.

The commercial loans you can get generally have fixed rate terms of 3,5,7,10 and 15 years for up to 30-year loans. Some lenders will allow you to have up to 25% of the building used for commercial purposes.

Whenever you get a commercial loan, you will always face the factor called a DCR, which simply means the Debt Coverage Ratio. This factor (along with at least two others) indicates how much indebtedness there is when compared to the income, and it is always stated as a ratio - such as 1:1.5. Stated this way, it means that for every $100 of debt you have on the loan, you will be receiving $150 of income - a decent ratio.

This number, however, can hurt you when you apply for an apartment building or multi-family dwelling that has few occupants, because the lenders will only look at the current income as the basis - unless you have some powerful evidence that will persuade them to do otherwise. Also, be sure to look at the DCR before you sign the commercial loan agreement. Some lenders may allow this number to be in the negative, which is not really doing you a favor. A good lender will not give you a loan if it is in the negative, or, too close of a ratio.

Business Loans

Business loans are commercial loans that are often considered not easy to come by - unless your business is really successful and getting a steady positive cash flow - for at least the past two or three years. You can probably expect to hear more than one rejection in your efforts - unless you have had similar financial dealings with a lender already. There are many different types of business loans available and they run from the solid secured commercial loan to a signature loan that does not entangle your property.

Business loans are also available for new business start-ups. These loans, if you are new to business, will be based on your own personal credit scores, and will often be secured on your house - at least, if you want the best interest rates. But you certainly will want to be very careful about this, because a default on payments may also put you out of the house, too.

When you look for a commercial loan for your business, you also may want to consider what are called subsidized loans. These loans are available from either the government, or from some private lenders who are looking to promote certain types of businesses, or other agenda. You will either have to look around the Internet, or ask lenders, if there are any subsidized loans available for your kind of business - or ethnic situation. The advantage of these loans is that the interest is always lower than a standard business loan.

Part of your preparation for most commercial loans, and especially a business loan, is to have a strong and well-developed business plan. In fact, the better developed it is, the more likely you are to have your commercial loan approved. You also will want to have copies made because you will need to give one to each direct lender you apply to. By applying through a mortgage broker, though, they can send copies to multiple direct lenders at the same time - if you also have an electronic version.

Other Businesses Loans

A commercial loan can be obtained for just about any type of business. You can get a loan for a restaurant, a hotel, a franchise, a gym, a dry cleaners, a store, a mall, a mini-mall, offices, health care facilities, nursing homes, and so much more. Each type of building, though, and business will require a different amount of paperwork, and each commercial loan application will be treated as a unique situation. There are no cookie-cutter loan application processes.

Your financial records will be closely examined, and there may even be a need to submit ongoing current financial statements, too, in some cases. Make sure you know about these before you sign - because you may not find out about it until afterwards.

Generally the loan process can take as little as 48 hours, up to about 3 or 4 months for approval. This will certainly require some advance planning on your part in order to make sure the financing goes through when it is needed. Bridge loans can be approved in shorter time periods and they generally require less paperwork.

Different inspections may also need to be obtained. For instance, there may be a need for an environmental inspection if you are putting up a manufacturing facility or buying one that is already in existence.

, and better interest rates are given to apartment buildings than to other commercial enterprises.

Multi-Family Unit Loans

If you are looking to buy a multi-family unit with more than five units in it, you will discover that the loan amount changes somewhat with the smaller building. For buildings that are smaller than 5 units, they are simply considered as residential buildings. Now, you may borrow about 75% (possibly up to 80%) of the LTV, instead of the 75% on a large apartment building. This is partly due to the fact that you will often have at least one apartment empty, which could result in a higher percentage of loss of income. Large apartment buildings, on the other hand, have a better Return Of Investment (ROI) than a smaller unit would have, and a lender can expect it.

The commercial loans you can get generally have fixed rate terms of 3,5,7,10 and 15 years for up to 30-year loans. Some lenders will allow you to have up to 25% of the building used for commercial purposes.

Whenever you get a commercial loan, you will always face the factor called a DCR, which simply means the Debt Coverage Ratio. This factor (along with at least two others) indicates how much indebtedness there is when compared to the income, and it is always stated as a ratio - such as 1:1.5. Stated this way, it means that for every $100 of debt you have on the loan, you will be receiving $150 of income - a decent ratio.

This number, however, can hurt you when you apply for an apartment building or multi-family dwelling that has few occupants, because the lenders will only look at the current income as the basis - unless you have some powerful evidence that will persuade them to do otherwise. Also, be sure to look at the DCR before you sign the commercial loan agreement. Some lenders may allow this number to be in the negative, which is not really doing you a favor. A good lender will not give you a loan if it is in the negative, or, too close of a ratio.

Business Loans

Business loans are commercial loans that are often considered not easy to come by - unless your business is really successful and getting a steady positive cash flow - for at least the past two or three years. You can probably expect to hear more than one rejection in your efforts - unless you have had similar financial dealings with a lender already. There are many different types of business loans available and they run from the solid secured commercial loan to a signature loan that does not entangle your property.

Business loans are also available for new business start-ups. These loans, if you are new to business, will be based on your own personal credit scores, and will often be secured on your house - at least, if you want the best interest rates. But you certainly will want to be very careful about this, because a default on payments may also put you out of the house, too.

When you look for a commercial loan for your business, you also may want to consider what are called subsidized loans. These loans are available from either the government, or from some private lenders who are looking to promote certain types of businesses, or other agenda. You will either have to look around the Internet, or ask lenders, if there are any subsidized loans available for your kind of business - or ethnic situation. The advantage of these loans is that the interest is always lower than a standard business loan.

Part of your preparation for most commercial loans, and especially a business loan, is to have a strong and well-developed business plan. In fact, the better developed it is, the more likely you are to have your commercial loan approved. You also will want to have copies made because you will need to give one to each direct lender you apply to. By applying through a mortgage broker, though, they can send copies to multiple direct lenders at the same time - if you also have an electronic version.

Other Businesses Loans

A commercial loan can be obtained for just about any type of business. You can get a loan for a restaurant, a hotel, a franchise, a gym, a dry cleaners, a store, a mall, a mini-mall, offices, health care facilities, nursing homes, and so much more. Each type of building, though, and business will require a different amount of paperwork, and each commercial loan application will be treated as a unique situation. There are no cookie-cutter loan application processes.

Your financial records will be closely examined, and there may even be a need to submit ongoing current financial statements, too, in some cases. Make sure you know about these before you sign - because you may not find out about it until afterwards.

Generally the loan process can take as little as 48 hours, up to about 3 or 4 months for approval. This will certainly require some advance planning on your part in order to make sure the financing goes through when it is needed. Bridge loans can be approved in shorter time periods and they generally require less paperwork.

Different inspections may also need to be obtained. For instance, there may be a need for an environmental inspection if you are putting up a manufacturing facility or buying one that is already in existence.