Chhristian Commercial Mortgage Financing
Businesses interested in obtaining Christian commercial mortgage financing can generally find borrowing programs that are geared toward a wide variety of real estate needs. In some ways similar to private mortgages, these funds are used to purchase property that will not be used for residential purposes. In most cases, the borrower will be a business rather than an individual. The kinds of property that might be purchased could include apartment buildings, property to be used for manufacturing or warehouse purposes, or could be used as a retail store or other commercial venture. Qualifying for commercial mortgage financing can be a little more complicated than standard residential lending. This will generally be true because the ability to pay the loan back will depend on a business or partnership's credit worthiness. As a company grows, the need to expand manufacturing space may follow. Storage needs for inventory and equipment may require additional warehouse property. There are special lending programs to address both of these needs. Retailers who are experiencing an increase in sales activity may need to enlarge their current facilities. Funding for this need would be considered commercial lending. Another need that falls in this category is the purchase of office space. Whether a small building or a large office complex is required, specialized loans can supply the needed cash to pull this off.
Since these properties will serve as collateral for the loan, any commercial mortgage financing is considered a secured loan. Secured loans will generally have lower interest rates and easier terms. This is because the risk to the lender is not as high as is the case with unsecured debts. Should a borrower fail to make good on repayment of the debt, the property itself can be repossessed and sold to attempt to recover the balance of the loan. In addition to properties that are purchased for business purposes, machinery, equipment, and other supplies may also be attained using these funds. Start up ventures as well as established businesses can apply for this funding and terms will vary on these loans. Unlike traditional home loans, business financing may require shorter pay off terms. A loan that extends to fifteen years or even shorter is not uncommon. Some loans, particularly those that are used for building business properties, may involve a period of low payments that is followed by a large balloon payment when the building project is complete. Businesses that have a poor credit history can expect to pay higher interests rates if a loan is attainable. Whatever options a business owner might choose commercial mortgage financing can be a valuable tool for growth.
Most companies can find a suitable lending solution among the many commercial mortgage financing options that are available. These programs could include funding for multi family apartment buildings, office or retail space, properties that are suitable for industrial use, assisted living apartments or condos, or even churches. Small balance loans might range from five hundred thousand to one million dollars and could be used for office or retail space or for multi family dwellings. Micro loans might supply funds in the neighborhood of one hundred to five hundred thousand dollars. A category of financing called bridge-hard money will generally be available to the tune of one million dollars or more. The use of these funds might be approved to a borrower who can show both a solid business plan and clearly demonstrated equity. A distressed asset acquisition program is a form of commercial mortgage financing that could help to acquire certain assets for investors or developers. Other types of loans could include funding for hotels or other hospitality industry properties, and church bond and church loan portfolio programs. Building a relationship of trust between the borrower and the lender is important. The Bible describes the relationship between the believer and God as that of a Heavenly Father and His child. "For ye have not received the spirit of bondage again to fear; but ye have received the Spirit of adoption, whereby we cry, Abba, Father." (Romans 8:15)
Some of the common purposes that are listed when an applicant attempts to attain commercial mortgage financing could include acquiring needed land to build on, purchasing an existing building that will be converted to commercial use, or expanding facilities that a company already owns. Before approval on these loans, a lender will need an assurance that the company has sufficient cash flow to make good on monthly payments. In addition, if the company has a poor credit rating, financing may not be a possibility. The personal credit score of the business owner will sometimes be examined as well. Lenders will also compare the value of the company as it currently is with the amount of money that is being sought. Other considerations could include the quality of the business plan and the type of company or venture that is applying.
Construction loans will function a little bit differently from many other examples of commercial mortgage financing. For example, a borrower may only need to pay interest charges while the property is under construction. Once the construction has been completed, the regular payment will kick in. This is because a finished commercial property can generate cash for the owner while a building under construction can not. By supplying the needed funds up front, a lender is enabling a borrower to carry through with a construction project without the added stress of high payments.
Christian Commercial Property LendingCommercial property lending sources are as varied as ice cream flavors with some the borrower will like and others as distasteful as watermelon custard. Of course the lender chosen will depend on how anxious the borrower is to secure the property and what kind of shape financially he finds himself at the moment of deciding he just must have that property. Rapid cash will probably be delivered best by a hard cash lender while if there is a little more time to finalize all details, perhaps a bank can offer more favorable conditions for the loan. But the issue always comes down to circumstances, but usually never with the lender. There is always legal money to be had one way or another. Of course, recent events with Wall Street may affect everyone's ability to get commercial property lending money to some degree or another, but a typical financial world can offer these options.
Take the case of Herman the Bird Man who sells one hundred species of birds found all over the world to pet stores, colleges, commercial aviaries and others who find the feathered creatures to be of varied interest to their lives or businesses or pursuits. Herm is running out of room in the warehouse where the man readies the birdies for flights to hither and yon. Cockatoos are fighting with macaws and a new place must be found immediately. His search has taken him to the outskirts of town where a very large and now defunct factory building sits quietly waiting for the rantings of a magpie. Herm knows this is the new place, but when the guy calls the realtor, Herm is told another inquiry of serious nature has been made and if so desired the man can call to verify the seriousness of the other party's interest. Herm cannot wait on a bank's typical thirty to sixty days loan process and must act quickly, so Herm calls a hard cash lender who has been known to help local businesses that need commercial property lending resources.
A hard cash lender is a private commercial property lending investor who can do anything with his money he wishes, so no bank regulations or laws need stand in the way of making a deal. In most cases, a hard cash lender makes loans in the geographic sphere of personal knowledge, and this lender knew exactly the property of which the Bird Man spoke. Herm knew a lot about birds but not much about commercial property lending so sticker shock set in when the hard money lender laid down his terms. The lender would loan Herm one hundred eighty thousand of the three hundred thousand dollars needed to purchase the old factory, a pretty standard sixty or seventy percent hard money loan detail. This hard money lending agreement, also known as a bridge loan, would be for one year and would cost Herm four points, more typical hard cash requirements. Since a point is equal to one percent of the loan, $7200.00 was the upfront cost of borrowing the investor's commercial property lending money plus twenty three percent interest. The investor asked that Herm also put up his house as collateral for the rest of the one hundred and twenty thousand he would have to get from another investor or money source; all requirements very typical for getting quick hard money.
Commercial property lending sources can also be what is known as angel investors, who are wealthy individuals who most often supply start-up capital for high profit businesses, usually in exchange for partial ownership of the business. In most cases, these investors invest in such things as medical supply, medical equipment and other high tech business ventures. These investors are very particular with whom they loan money, as opposed to the hard cash lender who is not nearly as interested in a borrower's credit rating because all the loans are tied up with property collateral. Business plans and financials must be of the highest caliber before an angel investor will part with any money. Investing to make a lot of money isn't nearly as important as investing in one's spiritual relationship with God, at least according to how Jesus looks at things. "Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt and where thieves beak through and steal." (Matthew 6:19)
The banks and Christian investor groups will be the bread and butter of the traditional resources for commercial property lending streams. Banks, dealing with depositors' money will in most cases offer the lowest interest and points costs, but will also be the most stringent in terms of borrower requirements. In today's market, nearly flawless credit histories will be demanded of bank borrowers for any loan, including business loans. The very nature of government regulations by which banks must abide will limit the creative nature of commercial lending agreement that private lenders and investment groups can offer. Investor groups, tied to very little government control because they deal in private investor money, have a higher risk tolerance and can engage in more creative ways to make property lending happen. Since the borrower requirements are lower, investor groups will charge much higher interest rates and points for the credit.
With all that is happening within the credit markets recently, lending for commercial transactions may slowly grind to a halt, even with the influx of government money into the economy. Experts warn of more upheaval in the months to come. Jettisoning as much debt as possible is good advice for all involved in business. Herm the Bird Man made that choice. His wife wasn't about to agree to putting up their house for the new deal so they sold the business to a septic tank cleaner and moved to Florida. Herm is fishing and selling insurance.