Commercial Loan Rates
Commercial loan rates for the smallest of businesses will be based on the credit scores of the owners. For larger small businesses, it can be based on the profitability and the repayment of the company's debts in a timely manner. But there are a number of factors that go into lending agreements for small businesses such as market situations, the availability of credit and the type of project that will be funded with the money. The need for loans for business opportunities is an ongoing process and without timely approvals and processing of such transactions, the country's economy can quickly grind to a screeching halt. So it is in the lender's best interest to provide the most competitive and business friendly commercial lending rates as possible.
When times are more difficult economically, there are two things that can happen to commercial loan costs. First, depending on the direction of the market indexes, commercial loan rates can rise dramatically. In the 1970's costs for loans reached over twenty percent, virtually shutting down many business ventures and snuffing out plans for future expansion. In other times when money is available but other factors impede on the market, the financial integrity of the small business owner comes into play leaving all but those with credit scores of over seven hundred out in the cold. There are few proponents of a servant type mentality in business today; the atmosphere is dog eat dog and to the victors goes a lot of fur in one's teeth. But Jesus gave to us the secret success when he said, "And whosoever of you will be chiefest, shall be servant of all for even the Son of man came not to be ministered unto, but to minister and to give His life a ransom for many." (Mark 10:44, 45)
The first hurdle in getting money for a new start up venture or new equipment for an already established enterprise is having a plan in place that can be shown to lenders. Being approved is really more important in the initial stages than the commercial loan rates that might be available at the time. Whether they are low or high, unless a lending institute is convinced that either (a) an entrepreneur has the knowledge of the business and the ability to make it go or (b) the already up and running business is doing well enough to deserve more risk and investment in the business. Commercial rates, if credit money is available, will depend on those factors. If money is scarce because investors are skittish about certain market activity, the direction of commercial loan rates can only go up.
If a sound business plan is in place, then it may only be the credit report of the small business owner that keeps the loan from happening, or raises the commercial loan rates tied to the loan. In boom economic times, all lenders have lowered expectations of their customers, often overlooking some flaws in their credit history. Loans are made but often at much higher commercial loan rates. When things tighten up and lenders are more concerned about stability factors, money will only be loaned to those deemed most trust worthy. This translates into higher credit score demands of the lender to the business owner even though there is abundant money to lend.
The lender that one chooses will often dictate what kinds of costs will be incurred when the loan is secured. Banks are absolutely the lowest when speaking about commercial loan rates. But they are also the stuffiest in terms of requirements from borrowers. In good economic times, their FICO requirements are high enough to easily be seen by passing astronauts. In tough times, it takes the Mars Explorer to catch a glimpse of the numbers, routinely eliminating hordes of owners. When banks are eliminated, an owner can try a couple more resources including brokers. These are middlemen between high risk investors and those seeking business lending agreements. Brokers look for those investors that might be able to live with higher risk borrowers. You'll need the Hubble on steroids to see the high interest rates from a hard money lender that might be willing to risk lending cash for a business opportunity, but this lender will want to see the owner put up personal property for this lending agreement to work.
The object of business lending agreements is also of importance when discussing issues such as lending agreement costs. For example, commercial loan rates for property can be lower than lending costs for staff training, certain equipment, advertising or other semi-nebulous expenses. These are unsecured loans and because they have little or no collateral to back them up, pose a greater threat for loss for the lender in the case of a default. Whether it is a short term business loan, a lending agreement for an ecommerce start up, working lines of credit, equipment leasing or letters of credit, there is never a one size fits all approach applied by the lender. In more difficult times, when money is tighter, lenders will look into the eyes of two deserving and qualified applicants and look for the fire that is needed to succeed. The lenders will be looking at the indefinable qualities of leadership and capability and will go with the one borrower who can make it even if the loan isn't approved and if it is, will still make even the loan costs are higher than expected. Have your eyes examined before going after the loan your business needs.
Commercial Loan Interest RatesCommercial mortgage interest rates are affected by several factors that one may or may not be able to adjust in order to receive the best percentage. If people have a good credit history, a reasonably profitable business report and some business assets, they will have little trouble in securing needed funds. Since these borrowed funds are approved by a lending institution with the property itself as the collateral, a person's ability to pay off the payment plan is the most important concern for lending companies. If someone needs funding to purchase an existing building, office, shop or real estate for a corporate development or perhaps they need to update their present business, they will need to check around with several sources for competitive percentages within this financial arena.
The lending company has rights to the property as collateral for their loan to a client since a commercial mortgage is used to purchase properties or lands for business purposes. If a client defaults at any time on the monthly payments, the lending company can take full possession of the building or property to sale in order to receive payment for their help. The commercial loan interest rate on any of these mortgages is usually lower than a typical business one that is unsecured. Most lending sources that offer low rates do so in light of the fact that this type of property usually holds higher value than other types of real estate.
If funds being borrowed is defaulted, companies that provided these programs are relatively assured that the business will receive all of their money back. Mortgages with a good commercial loan interest rate are offered by a wide array of lending companies that specialize in these types of monies and can be approved for as little as several months or up to 25+ years. They are available in more flexible amounts than are many other business funds extended by banks. Many banks have a minimum amount that may be borrowed for these types of programs making it difficult for some businesses to find the right funding they need.
Sometimes banks that offer this funding can pressure a borrower to apply for more than is actually needed in funds just to meet their minimum requirement. Companies that specialize in commercial mortgage loans offer more flexible amounts and as well as good commercial mortgage interest rates to those who qualify. These can be quite reasonable for borrowers if a business owner can show that he or she can make required payments. In order to qualify for a better commercial loan interest rate, a borrower will generally need to supply business records for the previous 3 or more years.
Financial reports, profit/loss statements, other financial agreements, inventory records and other information generally will be needed so that the lending company can analyze a person's financial capabilities. If considering someone a good risk, they will more likely receive lower commercial mortgage interest rates. This information will also be helpful in determining whether one receives a fixed or variable commercial loan interest rate at the time of approval. Of course the amount of money needed will also determine what type of rates others are offered as well.
Even though it is always helpful to have as many assets as possible when approaching any lending company for funding, keep in mind that these loans are different in that the business property being purchases will be the collateral for the needed funding. Since the bank has access to the property if a person defaults, they will lose the property and it will be sold to pay off the borrowed funds. People can also receive help with discounted percentages in some cases for necessary equipment and other additional property or buildings that enhance their present business.
Any high cost real estate or property that is needed for business can be considered for this type of mortgage. These loans are considered one of the best and more affordable ways to receive necessary capital to fund a business venture. With its flexible loan amounts, business property for collateral feature, and its possibility for low commercial mortgage interest rates, this type of loan can help many business owners have ready capital and flexible repayment terms that they can manage.
Commercial mortgages can cover most business real estate needs any business owner may have including land, building and renovation projects. Keep in mind that one will generally receive the best interest rates and terms from a company that specializes in commercial mortgages. If someone needs more information regarding the option of a commercial loan that can lock them in to a low, commercial loan interest rate, there are many online sources that offer free consultations. "But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you." (Matthew 6:33)