May 25, 2024


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Commercial Loans Made Easy

Some projects are simply not suitable for a conventional loan, and a specialist type of business borrowing is required. Whether somebody is looking to set up a business, start a property development project, or simply buy land as an investment, commercial loans of texas can be the best option to get the job done.

The main difference between a domestic borrowing product and a commercial product is that business-related loans tend to be assessed on an individual basis, whereas more conventional deals tend to be packaged and processed to set criteria.

Some basic types of circumstances which might be suitable for a commercial loan include purchasing disused land with a view to building property, buying an existing set of retail units and refurbishing them, or buying a business such as a pub with the intention of renovating and turning it into a hotel.

There is also such a thing as owner occupier finance, which is a type of loan geared to helping somebody buying the premises their business is run from. For example, somebody may set up a successful catering business and after a few successful years may be looking to buy the property freehold or leasehold instead of continuing to rent.

Other commercial forms of borrowing include investment mortgages which are essentially secured loans on business property or mixed use property. These can be popular with people who are looking to develop rental income before perhaps making profit on resale in the future.

Investment mortgages can be good for buying office space with the intention of renting it, or a retail and residential development, including shops and flats projects, for example. This may sound a lot like residential buy to let but the main difference is that this kind of loan will again be tailored towards the specific application. This means that the potential lender will look carefully at the applicant’s business plan and decide whether or not the plan is viable and plausible.

Buying property at auction is also something which may require commercial loans, and some companies can supply finance on a prearranged basis ahead of the auction day so a buyer can meet deadlines placed on them after making a winning bid.

Another way of gathering cash quickly for the purposes of buying at auction is bridging finance. This is essentially a method of releasing cash tied up in property on a short term basis. However, a lender must be able to see an exit route, for example via the sale of the asset mortgaged.

Commercial loans can mean opening up a business plan to a lender and in many cases this can mean a longer process for approval compared to an ‘off the shelf’ style domestic mortgage. However, for some projects they are the most suitable option and in any case a rigid assessment can help to ensure that an idea and business plan is watertight. Commercial options are also often much broader than some people may have thought at first, providing funding for a wide variety of aims, from developing one or two new houses to the demolition of an old site and transformation into a brand new mixed use development.