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Commercial Mortgage Solutions for Small Business

Provided by Buzgate.org Small Business Resource Referral Network, content partner for the SME Toolkit.

Whether you are buying or investing in a commercial property or considering using the equity accumulated in your current facility to fund growth, learn about finance options that can support your needs with a simple application process, fast turnaround time, flexible rate options, long term repayment and borrowing capacities up to 97% of your property value.

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Why Commercial Mortgage Solutions?

A mortgage is a financing tool for long term real estate assets. Like a residential mortgage, a commercial mortgage provides a venue for financing a real estate purchase without tying up short term credit or large sums of cash that may be better utilized for other business purposes.

Also like a residential mortgage, once you have a commercial mortgage you may apply for a second mortgage when your property has accumulated sufficient equity that may be put to better use, such as a source of funds for financing growth opportunities.

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Lender Comparisons

When looking for commercial real estate financing, there are some key differences between traditional bank lending practices and private lenders that you will want to compare before choosing the best approach for your business needs. View a Lending Comparison Chart or select any one of the following topics to learn more.

  • Maximum Loan Term - The length of time of the loan
  • Maximum Loan-to-Value (LTV) - The percentage of funds that can be borrowed against the full value of the property
  • Approval Time - The amount of time it takes to approve a loan application
  • Cash-Out Refinancing - Addresses whether there are any usage restrictions on funds obtained from refinancing
  • Appraisal Process - The process and cost for securing an appraisal of the property to be financed
  • Phase I Environmental Review/Survey - A preliminary examination of a site to determine the potential for contamination, which can represent significant cost and time
  • Balloon Payment - A large, lump-sum payment scheduled at the end of a series of considerably smaller periodic payments
  • Investment Property Loans - A type of loan where the individual or business does not operate in the property being financed
  • Required Deposit - The amount of funds that must remain on deposit with the financing institution as part of the loan agreement
  • Assumable Loans - Refers to whether the loan may be assumed by someone else in the future
  • Documentation Requirements - Addresses what documentation will be required to underwrite the loan
  • Financial Covenants and Ongoing Reporting Requirements - Pre-stated conditions that must be met on an ongoing basis to maintain the good-standing of the loan. If the borrower does not act in accordance with the covenants, the loan can be considered in default and the lender has the right to demand payment.
  • Points Charged - Finance charges assigned by most commercial lenders
  • Application Fee - Fees assigned when applying for a commercial loan
  • Processing Fee - Fees assigned for processing a commercial loan
  • Residency Requirements - Restrictions on where you must reside relative to the property being financed


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What to Ask

There are 8 key questions to ask when shopping for a commercial mortgage that can help you to determine what the best solution is for your needs. View a Helpful Article or select any one of the questions below to learn more:

  1. What is the maximum amount I can borrow?
  2. Is there a balloon payment?
  3. How soon will I have a solid commitment, and how soon can I close?
  4. Will I have to maintain minimum assets or deposits?
  5. What are the documentation requirements?
  6. How much financial reporting is required, and what financial covenants must I make?
  7. Is the loan assumable?
  8. What are the total costs associated with getting the loan?


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Fit Needs to Solutions

There are different types of commercial mortgages available depending on your type of business need. Select from any one of the following to learn more or view a Loan Comparison overview:


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Who May Apply

A further difference between bank lenders and private commercial mortgage lenders are the types of properties that are considered for financing. Below is a list of eligible and considered property types that private commercial funding sources often consider:

Eligible Property Types
Multi-family (5 + units)
Mixed Use
Self Storage
Mobile Home Park
Light Industrial
Day Care
Bed & Breakfast
Funeral Homes
Health Care
Gas Stations
Rooming House
RV Parks

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What to Expect

In general terms, below is a succinct overview of what you might expect when doing business with a bank versus some private lenders when applying for a commercial real estate mortgage:

Bank Lender Some Private Lenders
The most stringent loan requirements Clearly identified loan requirements
The most loan covenants No financial covenants or ongoing reporting requirements
The longest time to secure the loan 48-hour turn around regarding loan approval status

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Types of Financing

Depending on the type of Commercial Mortgage you choose to apply for, financing options with a private lender can vary between:

  • 6-month adjustable
  • 2, 3, 5, 7 and 10-year fixed, then adjustable
  • Declining fixed rate or fixed rate only


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New! Free Borrower's Guide

Request a FREE, easy-to-use Commercial Borrower's Guide to improve your ability to make informed borrowing decisions. Expect to learn about:

  • Commercial mortgage basics
  • How commercial real estate is valued
  • What determines the rate and maximum loan amount
  • And much more ...


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10 Great Reasons to use a Private Commercial Mortgage Solution

It pays to select the right commercial lender for your business needs. Below are 10 good reasons why choosing to work with a lender like your BUZGate educational sponsor, CommercialDirect, could represent significant cost and time savings.

  1. A fixed Lender Fee payable only at loan closing - not up front
  2. Fast turnaround time
  3. Highly automated and efficient loan application process
  4. High Loan to Value (LTV) - up to 97% on certain property types
  5. No application fee
  6. Option to borrow without income and asset documentation
  7. Parallel processing techniques supporting loan closings within 30 to 45 days
  8. Less paperwork
  9. Mortgage solutions from $100,000 to $1.5 million
  10. Up to 30-year Fixed Rates & Terms


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Where to Begin

By participating in the following 4-step loan process, your commercial mortgage may be concluded in 30 to 45 days compared to several months or more from other commercial lending sources.

  1. 1. Complete 1-on line form providing:
    1. Loan and property information
    2. Contact information
    3. Credit Score
  2. Collaborate with your Commercial Loan Specialist to complete the loan application process
  3. With a signed Conditional Pre-Approval Letter:
    1. Initiate appraisal process
    2. Order title
    3. Review loan
  4. Loan closing and funding upon loan approval and finalizing of terms


About Your Educational Champion

"An affiliate of Bayview Financial, L.P., Commercial Direct® offers a direct-to-borrower commercial mortgage origination program serving small business owners and real estate investors throughout the U.S. Employing a loan application process similar to residential loan underwriting, Commercial Direct® loans range from $100,000 to $1.5 million and cover an extensive selection of properties, including investment and owner-occupied property types."


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Note: This information is presented to provide a general overview of small business options and related services. It is not intended to be an exhaustive representation. Data has been compiled by the Knowledge Institute for informational purposes only. Content is provided on an "as is" basis and is not intended to, nor does it, provide advice or create a customer relationship between the Knowledge Institute, BUZGate™ and/or any other organization named herein, and any reader.

Copyright (c) Knowledge Institute, Inc., 11 Court Street, Exeter, NH 03833, USA
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