A mortgage is a way of using the inherent value of your existing or incoming non-liquid (non-cash) assets as a guarantee that you’ve got the means to pay a loan, instead of having to present only cash savings as proof. In personal home mortgages, for instance, a bank will lend you the money you need to buy the house you want, with that actual house or rather, its perceived resale value, as the guarantee. And if you fail to pay that loan in the future, you’ll face what’s called a “foreclosure” and lose the house.
But mortgages aren’t just for personal loans for buying homes. There are also commercial real estate loans for small to medium businesses and corporations, which are frequently in the form of a mortgage.
If you already own a small business or have started your own company, getting a commercial loan is relatively straightforward: make an appointment with a bank or financial group, and an agent processes that loan for you.
But the fastest way, however, is to go to your own bank or your company’s bank. The bank you currently have an account with already has a record of your financial background, and will require less paperwork from you. Even better, they may be more generous with an existing client. You can get a bigger loan than you would at any other institution, at less collateral.
If you’re just starting your business, be prepared with detailed proof of the value of your company, prior to getting that loan. But don’t worry too much; there are banks and lending institutions that have experience in assessing the potential value of a new business, and would be able to give you the loan you need to begin operations.
Of course, it’s even a lot easier and faster to get a loan if your company or business isn’t the new kid on the block. Banks and financial companies give a little less scrutiny to small-to-medium enterprises that have already been running for at least a few years.
When Commercial Mortgage Loans Make Sense
Whether you’re starting out or are already running one, there are right—and wrong—times and ways to get such a loan.
Get a loan for your business expansion only when, after assessing opportunities and risks, it makes more sense to borrow money now rather than wait until you’ve got enough profits to finance the expansion.
You’ll also need to consider the way your mortgage loan is set up. Get the financial product with the lowest interest rate, considering the bank or lender’s added percentage on top of what you already owe. You must also watch out for those tricky “processing fees” banks or financial companies charge; make sure your lending bank or group has low processing fees.
After making careful considerations, you’ll find that most of the time, opting for a commercial mortgage loan may just be the one thing that can save and make your business grow!