Home | Finance | Taxes
With over 25 major variations, commercial investing involving both real estate and businesses is significantly different from residential real estate investing. This business opportunity business loan article is designed to help inform new business investors about critical business finance issues because more residential real estate investors are considering commercial property loan and commercial loan possibilities. SBA Loan Financing The availability of SBA loan programs is an important and useful aspect of many business financing strategies. There are also critical limitations and potential problems with Small Business Administration business finance programs. Some commercial borrowers will benefit significantly from SBA loan financing, and it is equally likely that many business borrowers will either not qualify or should avoid such business loan programs. Business Opportunity Financing - Business Finance Strategies Because it involves the financing of a business without real estate, a business opportunity business loan can be difficult to arrange. Traditional business finance approaches are not workable. Several terms such as down payment requirements will be different in comparison to a commercial mortgage with commercial property as collateral and there will be fewer qualified lenders. Balloon Payment Requirements for a Business Loan Some commercial lenders will use balloon payments as a substitute for a true long-term commercial mortgage. With balloon payment terms, a commercial borrower will be faced with a large lump-sum payment that is due after a typical period of three to ten years. At that time, if borrowers are unable to afford such a large payment, they will be forced to either sell their business or refinance their business loan or business opportunity loan. Length of a Business Loan Long-term commercial mortgage coverage is normally offered by only a few specialized commercial lenders. Business opportunity business loans are typically limited to ten years. Commercial loan terms will be restricted to a three-year period or less by many local and regional banks. Recall Provisions for a Commercial Mortgage Business Loan A recall clause is one of the least desirable business finance terms offered by a business lender. If a business loan agreement includes such terms, a lender is permitted to require early repayment of the commercial mortgage under specified conditions. The terms which can cause the lender to call the commercial loan will vary but will commonly include periodic lender review of financial statements, tax returns and credit history. Business Loan Lenders - Think Outside the Bank Business financing situations are almost always more complicated than residential financing. The most competitive lenders for typical business finance situations will not usually be traditional banks. Regional and local banks are currently playing a smaller role in commercial financing and are even less effective in handling specialized business loan circumstances. Business borrowers should restrict their financing search to only specialized business finance lenders. Other Critical Business Loan Factors The business finance environment in the United States has many factors that distinguish it from residential financing. The factors not described in this report are included in other business loan reports. A few of the topics not included in this report include stated income business financing, the difficulty of refinancing an SBA loan, commercial loan appraisals and commercial financing lockout penalty fees upon sale or refinancing. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.
Article Source: http://www.rightarticle.com
Contact Stephen A. Bush at AEX Business Finance - Commercial Mortgage Programs for SBA loan and Commercial Loan strategies
Please Rate this Article
5 out of 54 out of 53 out of 52 out of 51 out of 5
Not yet Rated
