A commercial property loan serves as a mortgage designed for the acquisition or renovation of commercial properties. Typically, these loans are contingent upon the borrower being the primary occupant of the property in question.
For your business to qualify for such a loan, it is generally required that your business occupies a minimum of 51% of the total space within the building you intend to purchase.
Are You Eligible for a Commercial Property Loan?
While these loans can be invaluable for enhancing your business, they are accessible to a specific group of individuals who meet certain criteria. Let's explore who these potential borrowers for commercial property loans are.
Business Owners with Strong Business Credit
One of the most crucial factors that lenders consider is your business's creditworthiness. If your business boasts an impressive credit score, your path to obtaining the loan is likely smoother and faster compared to a business with poor credit.
Your business's credit standing plays a pivotal role in determining the loan amount, the interest rate, the repayment term, and the necessary down payment. A stellar business credit score places you at a significant advantage when seeking a commercial property loan.
Businesses with Valuable Property Assets
The value of the property you present during your commercial property loan application significantly influences whether you are granted the loan. Lenders will only fund your property after assessing its value and confirming its suitability as collateral for the requested loan.
In practical terms, your business should occupy at least 51% of the entire building. If your space falls short of this requirement, you might want to consider applying for an investment property loan instead.
Business Owners with Excellent Personal Credit Scores
If you run a small business as a sole proprietor, banks and other commercial lenders will invariably scrutinize your personal credit score. Your personal financial history and past financial decisions are closely linked to your business. Any previous debts you've incurred can impact your eligibility for a new property loan.
Even if you've managed to clear your past debts, lenders will still assess whether you struggled to do so or handled your financial obligations smoothly and on time. They may also investigate any past financial challenges, such as tax liens, foreclosures, legal disputes, and more.
A low personal credit score could hinder your ability to secure various types of commercial property loans, so it's crucial to address and improve your personal credit standing.
In Conclusion
Securing a commercial property through a commercial property loan is an efficient way to realize your business aspirations. You no longer need to save for years to accumulate sufficient funds to acquire your desired commercial property. At blakemortgage.com, we are dedicated to helping you achieve your financial goals of obtaining the commercial property of your choice. Feel free to reach out for your next loan whenever you require assistance.