Loan Officer

Before you decide to seek an industrial building loan, prepare a short synopsis of your financing needs and your assets for presentation to a lender. Owning your own industrial building affords you the opportunity to grow far beyond that of leasing property. It provides your business with a large amount of equity which can increase the overall value of the business. This can be profitable should you decide to sell the business.

Owning your own industrial building puts your company in a stronger borrowing position. Remember, commercial real estate can be tied to a line of credit. This can allow contingencies for cash flow issues, expansions, or equipment repair or purchases. This type of investment property also provides your company with stability and longevity.

Lenders evaluating industrial building loans have many options. This is a broad category and finance programs vary widely based on such factors as loan amount or whether you will occupy the building yourself or have tenants. Environmental concerns can be a major factor and often slow lenders as the liability for contamination is high within the industrial building loan sector. The downside to owning includes the initial capital investment and you will be responsible for fixing and improving the business for yourself or your tenants.

It is a good idea to check with your lender prior to signing an offer of purchase. Check your documents to make sure that all of the lender’s conditions have been met. For example, the environmental and building inspection could reveal major work to be done which can sometimes be included as part of the loan. You can further protect your business’ cash flow by obtaining a complete quote for moving expenses and including it in your long-term financing. It can be very expensive for a company to move and install equipment at a new location.

Beyond the physical condition, there are some intangibles to consider. Building owners with tenants are vulnerable to sudden economic downturns. An under-occupied building can lead to financial hardships. Payment histories and tenant credit files need to be examined to determine the degree of risk involved. Tenant evaluation is not as important when seeking an industrial building loan as it is with other commercial properties, but it is still important. Lenders check the time left on the current lease and other relevant information. They will be most concerned about the time left on the lease. Some lenders will not lend you money beyond the term of the tenant lease. For older buildings, the insurance policy may contain a list of claims that have been filed, pointing out the building defects and potential problems.

There are things to consider when you are deciding to seek an industrial building loan. Return on investment (ROI) is the measuring rod that all investors should be using when they are entertaining the purchase of an industrial building. What return will you receive on the investment? The lender will want to know that you can repay the loan. What is the LTV or loan-to-value ratio which is the amount of debt as compared to the value of the property? The investor’s bottom line is the net operating income which is the gross income of the property less direct operating costs, but excluding depreciation, amortization and interest expenses. The NOI will dictate what industrial building loan the investor will receive and how much money he will have for his discretionary income at the end of the fiscal year.

Ownership of an industrial building can be risky, but if you follow the right steps in seeking that industrial building loan, you will be able to reduce that risk, profit from multiple revenue streams and grow your company.

Commercial Lending

Motels are roadside private lodges along the countryside highways. The word motel is derived from the two words: motor and hotel. A motel is a hotel that is convenient to the motorist to park his vehicle in the parking lot and take some rest during travel.

A typical motel is built in a U shape, and the inner courtyard is used for parking and the doors of the rooms face the parking lot. This is very comfortable for the traveler to unload and load his baggage. He can also keep an eye on his vehicle during his stay at the motel.

To construct or to purchase an existing motel, banks or financial organizations offer loans. Generally, for real estate, land, or construction, lenders prefer mortgage loans. Basically mortgage itself is not a loan. It is a security from the borrower to the lender for the loan. It is an evidence of a loan.

The borrower of the motel mortgage loan transfers an interest in the property that is the motel to the lender. It is on the condition that after satisfying all the terms and conditions of the mortgage loan, the motel will be returned to the borrower of the mortgage loan.

In some jurisdictions, only land can be mortgaged. In this mortgage loan system you don’t need to pay the full amount immediately. The mortgage loan system is very common; you can even say it is a standard procedure in the field of real estate.

While dealing with a motel mortgage loan, the following parties will be involved:

Borrower: The borrower of the motel mortgage, as with other mortgages, is called as mortgagor in legal terminology. The borrower should fulfill the conditions of the loan. Otherwise he will face the risk of foreclosure by the lender to recover the loan.

Mortgage lender: In legal terminology, a mortgage lender is known as a mortgagee. Just like other mortgages, motel mortgage provides security to the mortgagee, as he is financing a large amount of money. The mortgagee naturally wants security, as there is a big risk in financing a huge amount.

The mortgage lender finances the borrower and registers the mortgage. The borrower has the right to discharge the motel mortgage once the loan is cleared. The borrower remains the owner of the property, but the lender can can enforce the security as a right to sell or to take possession in case of default.

Where as in case of mortgage by demise the lender becomes the owner of the property till the loan is cleared or the other obligation of the mortgage is fulfilled completely, known as redemption, on the condition of returning the property on redemption.

Investors: Investors usually look to diversify their investments to overcome the risk of investing the available funds in only one investment. Investing in real estate by taking mortgage will provide more returns.Investors will get a tax benefit, as mortgage loan is not tax deductible.

Commercial Lending

A conventional lender offers traditional mortgage loans on normal or conventional terms and conditions. The loans are held in his investment portfolio until they are repaid fully. There are some benefits of using the conventional lender:

1. The conventional lender is ready to negotiate or eliminate certain loan fees. Building a good relationship with him helps the borrower enjoy certain benefits.

2. The lender keeps the loan in his own lending portfolio, so he allows more underwriting flexibility. Since the loan does not require meeting secondary market guidelines, he offers more flexibility.

3. The conventional lender may have the willingness to provide financing to personal property along with the real estate loan. The borrower can therefore utilize the amount for buying appliances, furniture, etc.

4. The loan is held in portfolio, so the appraisals require meeting the guidelines of the conventional lender only, whereas non-conventional loans require strict appraisal of the Federal Housing Administration.

5. If the borrower finds it difficult to obtain private mortgage insurance, then the conventional lender insures the loan and charges a high rate of interest for facing a greater level of risk.

6. When the borrower experiences cash shortage, the conventional lender may provide funds to settle closing costs. However, he may charge a high interest rate for the same.

7. The lender may allow some creative financing options to the borrower.

8. Generally, conventional lenders do not require an upfront mortgage insurance premium when a borrower closes the loan.

9. There is no loan limit in conventional lending, so the borrower can raise funds to meet all his business requirements.

10. Conventional lending does not involve red tape. It requires shorter processing time. It offers great flexibility to the borrower.

11. Conventional lenders offer various options to the borrower, like fixed interest rates, variable interest rates, etc.

Despite the benefits, there are some disadvantages in seeking the help of conventional lenders. The lender would not lend on a property that is in poor condition. He may not be willing to lend on property that has insufficient cash leverage. Again, if the borrower’s credit score is too low or if the borrower seeks fast closing, the conventional lender may not be able to lend.

Conventional lenders usually require larger down payments than non-conventional lending institutions. The lender sets the interest rates and so there is chance of higher interest rates.

Conventional lenders stick to specific lending programs, so they are unable to suit the specific needs of individual borrowers. Most of the lenders offer loans based on the cost of the project. They offer 50 to 80% of the cost of the project. However, private lenders lend based on future value of the property.

Though potential borrowers are more likely to turn to private lenders to get rid of their financial difficulties, conventional lenders are considered as one of the major financial source by the borrower. In fact, conventional lenders charge lesser fees as compared to private lenders. Most of the conventional lenders charge 1-point origination fee whereas the private lenders charge 3 to 6 points.

Commercial Lending

Commercial land loans basically mean a loan taken for financing a land for future commercial development. These commercial land loans are very hard to get compared to any other type of loan, or even other types of real estate financing. The request for a commercial land loan is generally treated with considerable caution by the financial institutions and banks. This is for a number of reasons and it is important that you know about these loans and what problems arise when applying for the loan and how to overcome them.

There is the question of security. The bank or any other financial institution would require some collateral to secure their loan. The land would not by itself make income in any form and so it is not considered as a good service for the loan. There are considerable economical and political risks included in this raw land which has not yet been approved by the regulatory agencies. Additionally, there are commercial land developments which are by definition financed during the start of the project life cycle, which makes it the most exploratory and also the most risky.

The fact is that developing land right from its raw state into something different on which you would develop your commercial project is the most stirring and also potentially profitable real estate activity where you will be involved. Therefore it is worthwhile to find ways to manage the risks that might arise. However, there are a few suggestions that can help you to maximize your commercial land loans financing.

Make sure that you do not rush over closing the land loan deal as most of the sellers and the market would might do. Basically, before you close you might want to complete the entitlement work. In practice, it is rarely possible to do this; however, the closer that you can be to fully permit-ready and entitled, the more power you can get to generate your financing. Make sure that you do all that is possible to avoid any third-party equity coming into picture. You must also try to keep 100% ownership over the project from the initial stages. This way you will be able to avoid reducing the profitability of your project and also increase the potential leverage.

Most often these commercial land loans are completed very economically. However, you will have to ensure that you let adequate time for the period of the application. In case you are in a hurry for quick cash then you can avail it as you take a hard money land loan. This will let you take your time and also negotiate for the best deal.

These commercial land loans are the only type of loans for real estate financing, and here there have been no increased options during the past few years. However, if you possess a well-planned-out commercial land project then you can certainly find a lender who is keen to help you avail the commercial land loans.

Commercial Lending

When banks help companies with lending commercial loans and other financial requirements, they need their clients to possess a basic understanding of all their terms and conditions. In order to ensure that it is the case when availing these leading arrangements, banks and financial institutions put together some of the descriptions of terms which have to be considered when obtaining a financing arrangement or commercial loan.

• Interest rates and changes – Rates of interest on business facilities are naturally variable, with large and financially strong firms frequently based on a previously decided spread over 30-day rates or prime rates. However, fixed-rate loans are estimated on the basis of spread over equivalent. Interest rates on of the high-risk loans are generally based on the targeted rates of lenders’ return for the alleged level of risk accepted. Most of the companies with loans rates floating are able to evade some of the variable rate debts by using the rate of interest swap. It is a financial instrument which represents the transaction wherein two parties are in agreement to exchange or swap net cash flow on an agreed period of time and amount.
• Advance rates on collateralized loans – Advance loan rates on non-real estate loans which are collateralized and frequently vary from one creditor to the other and also differ on the monetary strength of the company. When it comes to loans based on assets, most of the financial institutions and loan lenders will precede 75 to 85%of companies’ qualified accounts which are receivable and also 40 to 60% of eligible accounts. As the case for equipment, its terms and conditions are desired where loan lenders generally lend 75 to 90% of equipment value or cost. If the company requires maximizing money and desire financing 100% on equipment, they may require looking at some of the leasing alternatives.
• Limitations of Prepayment – Most of the fixed-rate loans and leasing facilities possess some kind of prepayment penalties that are associated with the loan when prepaid early. These prepayment penalties and limitations usually take the form of correspondingly no prepayment in the first year of leasing or the loan and the payment of some percentage of the balance of principle amount or the penalty which may be decided by using the maintenance formula. Some of the extended-term loans based on assets even generally carry prepayment restrictions which do not allow a company to cease the credit resources without forcing some kind of early closing fees.
• Assumptions – As most of the business credit resources do not usually provide third-party assumptions, some of the loan lenders will allow their notes to assign to few other eligible companies in some of the situations. Most of the time, these situations are authorized wherever it is in the interest of the loan lender in order to enable the obligation to take place. Besides that when a financial health of a company has gotten worse and the innovative party to the association offers few extra improvements to their credit relationship. However, under normal situations a company must not expect this to be one and only alternative in most of the conditions.

Commercial Lending

Most people try to look for various types of properties. Some seek real estate property for their personal use, whereas others look for an appropriate real estate property for commercial purposes, like building an office. However, this search doesn’t stop with just finding an appropriate real estate property. The main problem here is the financial problem. At times you may not desire to invest a lot of money into the property because there are many other costs associated with it. However, there are explanations for this kind of problem, such as commercial office building loans that enable you to get huge sums that you can use to purchasing a commercial real estate property.

Commercial office building loans are normally offered by loan lenders for buying real estate properties, equipment, and for meeting other operational costs. These types of loans normally possess low rates of interest that range from 6 to 13%. Therefore, commercial office building loans are considered to be one of the most helpful tools to improve and establish a business. Some of the benefits of using commercial office building loans include businessmen engaged in refinancing, acquisition, and construction of real estate properties. Commercial office building loans are secured loans which are normally secured with collateral as a security against the loan amount. Almost like the home mortgage loans, the repayment period for these loans is also limited. Normally 2% of arrangement fees are charges on these loans.

Commercial office building loans are available either in adjustable- or fixed-rate office building mortgage loans where the term of repayment usually varies from 10 to 30 years. Commercial office building loans usually offer flexible repayment alternatives compared to traditional home loans. Consumers can easily pay the loan on an annual, quarterly, monthly, or biweekly basis. Most of the loan lenders offer fixed interest rate only period. The repayment of commercial office building loans can be made easily by receiving extra funds from the assets you have purchased by utilizing the loan amount. Qualifying for a commercial office building loan can be a difficult task. However, loan lenders usually look at the resale value of real estate, income resources, credit history, creditworthiness, and the income made from the real estate.

The minimum amount that is available through commercial office building loans usually varies depending upon the lender, and it may fall between $100,000 and $250,000. The maximum loan amount that is available through commercial office building loans is unlimited, however it depends on the security. Most of the loan lenders offer 70 to 90% value of the real estate property as the maximum amount. Most of the online commercial office building loan providers usually offer these loans, and these include portfolio loan lenders like credit companies, life insurance companies and banks, non-bank loan lenders, government sponsored enterprise, and conduit loan lenders. Normally, life insurance companies and conduit loan lenders offer long-term commercial loans. The minimum loan amount, interest rate, and the term of interest available defer with the loan lenders.

Commercial Lending

When it’s time to expand your business, you start to look for a commercial loan. You can go and visit traditional lenders such as banks or finance institutes. You can look for information on the net as well. The complexities of the procedure can make your head spin. You would have to spend lots of time and it would all go to waste as nothing comes out of your exercise.

A commercial mortgage broker can help you in talking to the right lender. A commercial mortgage broker will save you a lot of time and money, as he will be able to get you the cheapest loan available in the market.

A commercial mortgage broker is aware of many loan programs than your local bank can offer. If the commercial mortgage broker has enough experience, he will be able to wade through lots of technical information that you will come across while applying for the loan. He will be able to point out any hidden costs involved. Commercial mortgage brokers are trained to look for these traps.

Commercial mortgage brokers work for you. They have your interest at heart. The lenders are also looking for commercial mortgage brokers as they help both parties to close the deal. A commercial mortgage broker works out everything in such a way that everybody is satisfied. You get the loan you need with cheapest rate of interest, the lender can make some money by the interest you pay, and the commercial mortgage broker gets his commission on the deal.

If the commercial mortgage broker has a good reputation and a lot of experience, then he can get multiple funding sources. The lenders also take him more seriously. They will not re-trade the deal. If they do, then in future that commercial mortgage broker will not work with him; thus, the lender will lose business.

A commercial mortgage broker will make the process of getting the loan much easier. As he is aware of all the documentation needed, he will make sure that you have all the things that are needed to close the deal before you apply for the loan. Your commercial mortgage broker will take you to the correct lender so the process of closing the deal will take minimum time.

It is always good to remember that there are lots of people who are in the money-lending business. But a person who has experience in dealing with the complex documention procedures can help you out. There are institutes other than banks that have loan programs.

Lenders also get back to the commercial mortgage broker sooner, as they also benefit from the transaction.

A commercial mortgage broker is very valuable in securing your loan. He finds the cheapest loan available. He looks into the technical part of the deal and looks for any hidden costs involved. The commercial mortgage broker makes sure that all your documentation is in order. So you save a lot of time and money by engaging the services of a commercial mortgage broker.

At the end of the day everyone is happy. You get almost a hassle-free commercial loan with the best interest rate and the commercial mortgage broker gets his commission.

Commercial Lending

Just the way mortgage finance is offered to people, there is also commercial mortgage finance offered to several commercial entities that use their real estate as collateral. According to commercial mortgage, the commercial buildings are generally considered as the security rather than a residential property. However, in case of any defaults in loan repayments, the lender has the right to seize the commercial property of the borrower to recover the loan amount. Commercial mortgages, as the name suggests, are generally offered to only the businesses and not to any other person. The businesses can be incorporated businesses, partnerships, or even limited companies.

These businesses must be financially sound, as you should know that the process of verifying income of business can also be complicated for the individuals who apply for a personal mortgage. As this is very complicated sanctioning of commercial mortgage finance, it also takes a lot of time—nearly 6 to 9 months. The reasons for applying for this commercial mortgage finance loans can be varied: to purchase the building of an existing business, to enlarge or make improvements to the existing building, and also to make residential and commercial investment for the development of real estate. It can also be to develop the property in some way.

However, rather than purchasing an already constructed business premises, like restaurants, shops, or offices, you can also use this financial help to purchase some other business assets like a machinery or plant that is required to run your business. Most often these commercial mortgage finance loans carry a bit higher interest rate compared to any other personal mortgage loan. However, this rate can also be much lower that the interest that is offered for an unsecured commercial mortgage finance loan. These mortgages are very similar to the fixed-rate home mortgage with regard to their interest rates, which remain the same for the entire period of the loan.

Most often commercial mortgage finance loans are offered for a period that ranges from 3 to 10 years, but the period of the loan can also be extended to nearly 25 years. Similar to the cases in personal mortgage, this loan amount and also the rate of interest will depend on the credit capability as assessed by the mortgage lender, but the lender would also consider your repayment capability. However, in other cases where you have an outstanding business record with verifiable loss and profit business statements then it will not be very difficult for you to get the commercial mortgage finance loan and that too at very attractive and desirable interest rates.

One of the best places to find a suitable lender to get this commercial mortgage is the internet. There are a number of commercial mortgage lenders who advertise on the internet regarding their commercial mortgage finance for beginners. Therefore you can find a number of lenders online with ready quotations about their commercial mortgage loans to offer you. Make sure that you compare different lender quotes in order to avail the best deal.

Commercial Lending

There are different kinds of commercial loans that are available internationally, and they are found to be suited for making investment in different kinds of properties. Church loans are special type of loans that are sought for financing of the churches. When compared with other available forms of commercial loans, it is generally noticed that church loans tend to be a little difficult to come across. All the financial institutions and banks do not provide this type of loans. When such loans are sought by banks the financial condition of the church along with the market value of the property held by it are taken into account.

When trying to obtain church loans, it is usually noticed that there are a lot of difficulties that are met by the people. These difficulties make the task of finding loans for churches a very arduous task.

Normally when a commercial loan is not repaid back in time, the financial institutions usually seize the property and then sell it off to other people. When the property involved tends to be land, office or residential buildings, finding a buyer does not tend to be a difficult task for the finance companies. When it comes to church loans, if the payments are not made in time, once the loan providers have taken possession of the church property, it is very difficult to sell off the property to any other buyer. The reason behind this is that the church property cannot be used for any other purpose.

When approached for church loans, it is generally noticed that the financial institutions want a single person to act as guarantors for the loan being taken. However as a church is not owned by a single person, it is very difficult to find a guarantor for the loans that are taken for a church. The lenders seek guarantors as the church property tends to be very difficult to sell once they have been seized by the lenders.

Church loans are very different than other normal types of commercial loans, and as a result most of the factors that tend to be suitable for normal loans, tend to be unsuitable for churches. Small loans, high interest rates, short term loans and low LTV or loan to value tends to be unsuitable when it comes to finding money for financing churches. This is why it is seen that church loans are very difficult to obtain and it is also noticed that the terms tend to be very difficult to be accepted by the churches.

Due to these difficulties in acquiring church loans, it is noticed that most churches are not able to perform the necessary restoration and repairs of the property owned by the churches. As a result of this it is seen that the condition of most churches tends to be very bad. Therefore, churches tend to face a lot of trouble in finding the necessary financing for their various financial needs. It is very difficult to find that new churches are being built, as the necessary church loans are not obtained, which would help in financing their construction.

Commercial Lending

Commercial loans and commercial lending are very different from what some people are familiar with for personal lending and personal loans. Commercial lenders have a different set of guidelines and principles that are followed while underwriting commercial loans. Commercial amortization would show the repayment schedule of the loan. This commercial amortization would also show the exact loan amount and the portion of the monthly payment that is applied to the interest payment of the loan.

Basically, amortization is a reduction in principle amount of loan over the time through the periodic and regular instalments of the loan payments. The payments would be calculated over time at a specific decided rate of interest. Commercial amortization schedules are mostly front-loaded. This means that they would lean heavily toward payment of the interest for the first few years of the loan period and later slowly would shift toward the payment of the principle amount of the loan in the later period.

For the commercial lending purpose, the lenders usually use the front-heavy approach with the amortization in order to ensure that they perfectly protect the lent amount. Therefore, it is important to understand how the lenders view and also analyze the ability of the owners and the businesses for conducting their business, and also how they can repay loan. When you consider borrowing a loan from the lenders for business purposes, make sure that you are prepared to get the loan and also have the capacity to repay the loan.

Commercial lenders make use of tools in order to access their business ability for repayment of the loan, and also start determining loan to the value of property which is purchased. It is calculated in order to help lenders determine and also make sure that property that is being bought is actually worth the price. This step would involve complete appraisal of property and also analysis of properties around for determining fair market value.

Basics of commercial lending are that for lenders to issue a loan to any business, they need to learn whether that particular business has sufficient operating income for repaying the loan. Lenders also should be assured that businesses have sufficient income on the reserve for normal operation and have the ability to pay loan terms. The main secured item for such commercial loans remains the property that is in use. This could also include the outbuildings and some other building on property, the fixtures and tangibles which could be possibly used as collateral in order to secure the loan.

Commercial loan amortization is the way that the lenders could remain secure for lending a new business loan by ensuring that interest that is made in early years of the loan would be sufficient for keeping them protected and safe even if the business happens to fail or the loan goes off badly. Commercial lending mainly relies on the tools like amortization for protecting the assets having an ability to continue lending commercial loans.

Commercial Lending