Although it will not be easy, avoiding key commercial real estate financing mistakes is likely to eliminate critical commercial mortgage problems that often have disastrous consequences. The combined use of advanced investment strategies and proper precautions is likely to produce improved business finance results.
While we will not be addressing all possible commercial mortgage mistakes in this article, we will include several of the most severe issues to anticipate. In our experience, the potential difficulties involving factors discussed below are more serious and common than most commercial borrowers are likely to expect.
Inexperienced Business Finance Brokers and Lenders -
Commercial mortgage financing has recently become more popular with brokers and lenders that previously focused on residential real estate financing. More and more lenders and brokers are looking for alternative revenue sources due to residential financing difficulties. Many of them are devoting increased attention to business finance and investment loan services.
While this shift might eventually result in a positive outcome for commercial borrowers, the immediate impact is a sudden influx of inexperienced residential mortgage brokers and lenders attempting to provide investment advice for business financing and commercial real estate financing. For most business borrowers, the use of inexperienced business finance advisors will be a mistake of potentially serious proportions. As we have written about extensively, there are approximately 25 major differences between residential financing and commercial financing, and most residential financing experts are simply unprepared for business loan complexities.
SBA Loan Refinancing for a Commercial Mortgage -
Because it is more difficult to refinance an SBA loan or conventional commercial mortgage than many borrowers realize, it is advisable to thoroughly review refinancing options before completing the initial business financing if at all possible. The biggest potential business finance mistake involving an effort to refinance is likely to be an assumption that refinancing can be easily accomplished and whenever the commercial borrower chooses.
In reality most business and commercial mortgage refinancing situations will require less attractive terms than the initial business financing. Since acquisition financing includes terms not possible upon refinancing, this observation is particularly relevant for SBA loan refinancing. Another potentially critical mistake is to overlook short-term business financing options which will eliminate refinancing problems.
A major obstacle to refinancing a commercial mortgage, whether it involves an SBA loan or not, will be prepayment penalties and other financial restrictions that effectively prevent refinancing for several years. Short term possibilities should be considered if a borrower expects that commercial loan refinancing in the first three years of the business financing is likely.
Specialized Commercial Real Estate Investment Property Issues -
With more specialized commercial properties and investments, the potential for serious mistakes increases substantially because of the advanced business financing complexities. Commercial mortgage loan choices are also likely to be more limited because there are fewer lenders which will provide this kind of specialized commercial real estate financing.
Businesses involving apartments, offices and retail space are generally considered to be less specialized from a commercial lending perspective. This is due to the likelihood that potential users and renters of such properties are more interchangeable than for a business investment involving specialized uses such as a funeral home, golf course and gas station.
The business finance costs for more specialized properties are likely to be more variable and unpredictable than for office buildings, retail stores and apartments. For example, environmental and appraisal requirements for properties such as funeral homes and gas stations will be extensive and time consuming.
Solutions and Strategies for Avoiding Business Financing Mistakes -
The potential business finance mistakes described above can be overcome successfully. It is recommended that business borrowers find sources offering helpful strategies and background information which will provide a comprehensive comfort level for complicated commercial real estate loan factors. Business borrowers should thoroughly discuss business financing options with a business loan expert before refinancing or buying a commercial property or business investment.
Related Articles
Commercial Mortgage and Business Finance - Real Estate Investing
By: Stephen Bush | 01/11/2007 | Finance
With the increasingly chaotic investment climate for residential financing in the United States, more residential real estate investors are exploring commercial real estate and business finance opportunities. It is important for prospective commercial property owners, business owners and business investors to educate themselves about options for the business loan and commercial mortgage environment they will be facing.
Sba Loan Solutions - Business Finance and Commercial Mortgage
By: Stephen Bush | 03/12/2007 | Finance
Finalizing a Small Business Administration loan (SBA loan) and refinancing a small business loan can frequently be among the most difficult commercial mortgage and business finance circumstances for a business investment borrower. There are successful business financing and commercial real estate loan strategies for both commercial loan situations.
Business Finance Essentials for a Real Estate Mortgage Loan
By: Stephen Bush | 12/12/2007 | Finance
Many residential real estate investors are exploring commercial real estate and business loan alternatives as a result of the increasingly chaotic investment environment for residential financing. There are more key differences between residential real estate investment and commercial real estate investment than realized by most borrowers.
Sba Loan For Business Finance And Commercial Real Estate Mortgage
By: Stephen Bush | 01/10/2007 | Real Estate
Finalizing a Small Business Administration loan (SBA loan) and refinancing an SBA loan can frequently be among the most difficult commercial mortgage and business financing circumstances for a business finance or business real estate borrower. There are successful business loan strategies for both loan situations.
Are SBA Real Estate Mortgage Loan...
Overcoming Business Loan and Commercial Mortgage Finance Problems
By: Steve Bush | 30/10/2007 | Non-Fiction
Business owners need to know what to do when a business loan application is turned down. For each of five key reasons that a commercial real estate loan might be declined, a practical solution is suggested for transforming the rejected commercial mortgage into an approved commercial loan.
Business Finance and Commercial Real Estate Mortgage Loan Choices
By: Steve Bush | 16/10/2007 | Non-Fiction
Short-term business finance choices are often forgotten due to confusion about long-term commercial mortgage loans and business financing. Although long-term business loans are often appropriate, there are practical short-term commercial loan and commercial real estate investment financing choices.
Commercial Real Estate Investment Property and Business Financing
By: Steve Bush | 01/11/2007 | Loans
Borrowers have more commercial loan and commercial mortgage options than they think. These business finance choices can be called "Thinking Outside the Bank" because most borrowers believe that a bank is the best source for a commercial real estate investment property loan or business financing.
Difficult Church Loan and Business Finance Solutions
By: Stephen Bush | 08/11/2007 | Finance
This article will offer an overview of key church loan difficulties and practical church financing solutions. Even with appropriate business finance and commercial mortgage strategies, this specialized commercial real estate loan is typically difficult to arrange.
Got a Question? Ask.
Ask the community a question about this article:
Frequently Asked Questions
What is eviction process in York, Pennsylvania? I ...
By: bootoo | 20-07-2008
what is eviction process in York, Pennsylvania?
I have a tentant who has not paid rent in 2 months(long story). they were supposed to be out of house July 15 per the written notice I gave them(which they signed). now they intend to stay for 2 more weeks with out paying....Help!
I filed for bankruptcy on my student loans in 1993 ...
By: zulie515 | 20-07-2008
I filed for bankruptcy on my student loans in 1993, now I getting harrassed by the U.S.Dept. Of Education saying that my student loans were not discharged, I'm so, so upset.
What 200 hundred dollars was worth in 1946 versus ...
By: Joetheone | 20-07-2008
What 200 hundred dollars was worth in 1946 versus 2008
Any information on how to start auto recycling ...
By: bestcrown | 20-07-2008
Any information on how to start auto recycling business ?
How can we save our home and ourselves?
By: teebee | 20-07-2008
We have been making payments on our mortgage for 8 years on our home wthout so much as a dent in the principle balance. I have spoken with my mortgage company and they justified this by telling me that I am accruing $11.50 a day in interest.
My family has been in economic hardship for a number of years and we have been trying to stay afloat. Our credit is damaged and we feel hopeless. We have also been trying to sell, and our home along with 200 other homes in our community are not selling. What are our options? How can we change the amount of interest accruing so we can survive?
How many miles is it to Woonsocket Rhode Island ...
By: margaret | 20-07-2008
how many miles is it to Woonsocket Rhode Island from Los Angles CA.
Q&A Powered by:
More from Stephen Bush
Working Capital Financing and Short-term Commercial Loans
By: Stephen Bush | 11/07/2008 | Finance
There are two short-term working capital financing options which are often overlooked by business owners. These involve business cash advances and short-term commercial mortgages.
Commercial Loan Help for Avoiding Problem Working Capital Lenders
By: Stephen Bush | 30/06/2008 | Finance
One of the most serious working capital financing scenarios is a lender that causes difficulties for their small business commercial borrowers on a regular basis. It is specifically this kind of commercial lender which informed commercial borrowers should be prepared to avoid unless realistic alternative options for commercial loans and commercial mortgages are totally impractical.
Avoiding Problems With Working Capital Business Cash Advances
By: Stephen Bush | 19/06/2008 | Finance
Working capital solutions and credit card processing are more connected than most business owners realize, and changes to either are likely to have measurable impacts on business profitability. The business finance benefits will be especially noticeable if several typical small business cash advance difficulties can be avoided.
Commercial Mortgage Business Loans - Think Outside the Bank
By: Stephen Bush | 05/06/2008 | Finance
Business borrowers have more commercial mortgage and business loan alternatives than they realize. We can refer to these commercial loan alternatives as "Thinking Outside the Bank" because a typical commercial borrower probably believes that a bank is the best source for a commercial real estate loan and business financing.
Small Business Financing and Commercial Loans - What to Avoid
By: Stephen Bush | 25/05/2008 | Finance
The worst case scenario for commercial borrowers seeking small business loans and commercial real estate loans is a situation that can be avoided. The focus of this article is on five avoidable situations involving commercial loans and working capital financing.
How to Avoid Small Business Financing Mistakes
By: Stephen Bush | 10/05/2008 | Finance
Avoiding key business financing mistakes is not an easy task. However, by avoiding such mistakes, commercial borrowers will eliminate critical business finance problems and obtain better commercial loan terms.
How to Improve Business Financing and Credit Card Processing
By: Stephen Bush | 24/04/2008 | Finance
Obtaining a business cash advance by using credit card processing is often overlooked by business owners. This important business financing and working capital management strategy is applicable to most retail and service businesses.
Business Loans and Business Finance - What You Need to Know
By: Stephen Bush | 09/04/2008 | Finance
This commercial loans report is designed to help educate new commercial investors about important business finance loan issues. Since more investors are exploring opportunities involving business loans, it is vital that they have an early introduction to the many critical differences between residential real estate investing and commercial property and business opportunity investing.
Finance 
