Saturday, November 24, 2012

Can My Small Business Afford A Commercial Mortgage ...

commercial mortgage and the small business Despite the official end to economic recession, banking lending and all-round financial confidence remains at an all-time low and as a result, business owners of all industries are left questioning the suitability of every financial move that is made.

As a leading form of business finance, a commercial mortgage is deemed by experts as the most appropriate form of lending, providing business owners with a great deal of desirable benefits:

  • Property Ownership
  • Financial Stability
  • Improved Cash flow
  • Low Interest Rates
  • Tax Deductible Sum

Greatly outperforming the business rental market, the commercial mortgage has achieved proven success across the board. However, in light of the recent economic struggle; business owners have refrained from initiating any form of expansion be it via property or staff and any form of lending be it a commercial mortgage or otherwise, why? The lack of government action and the declining trust of the banking authorities in the small business have created a volatile commercial market leaving the small business owner asking one question?

How can my business afford a commercial mortgage?

How Can A Commercial Mortgage Help?

The commercial mortgage stands out as the clear leader and has proven to have helped businesses of all industries achieve a degree of fundamental success and can help to achieve the same results for any business, however small it may be:

  • Providing vital funds for business expansion
  • Providing a needed cash injection
  • Allow for comfortable business growth
  • Cost reduction
  • Increased Profitability
  • Remain a leader in your industry

How Can My Business Be Deemed A Suitable Commercial Mortgage Candidate?

In light of the recent gravy train scandal, trust in banks has greatly diminished and borrowers are now, more than ever, wary of whom they seek financial aid from. As the result of the flailing confidence, the alternative lender has grown greatly in popularity and is now deemed the ultimate source for commercial finance.

In order to provide your business with the suitable financial injection; a commercial mortgage broker will, despite any previous loan rejection, clearly and concisely analyse your business finances, history and plans in an effort to determine your real loan credibility and whether; in the face of any future financial strain, your business will be able to withstand the pressure of monthly mortgage repayments.

The risk of default will always remain at the forefront of the decision made by a mortgage broker and using specific markers, lenders will thoroughly assess the qualifying factors of a borrower.

Loan to Value Ratio- A key factor used to assess potential borrowers, the LTV ratio is a figure concluded by dividing the borrowed sum by the property value. The lower the figure, the greater the suitability of the client.

Debt Service Coverage Ratio- Another key factor used to assess potential borrowers, the DSCR is a protective barrier sum formed by dividing NOI by monthly interest and mortgage payments. The higher the DSCR figure, the lower the client risk.

How Will I Be Required To Repay The Borrowed Sum?

If, using one of the aforementioned markers, you have been deemed suitable; the mortgage broker will grant your business the desired sum you wish to borrow however an agreement will need to be settled.

A commercial mortgage is often loaned for a period of between fifteen to twenty years and as the borrower you will be required to repay an agreed monthly sum; this sum will be determined by the type of mortgage you chose to select:

  • Variable rate- A risky option with varying payments
  • Fixed Rate- The safest option, with consistent payments
  • Interest Only- A financially desirable option, allowing the borrower to lower overall loan interest.

Dependent upon the type of mortgage you chose to opt for; you will be required , under any and all circumstances, to make your monthly payments without fail. Should you fail to repay your mortgage, your account will fall into default however your financial broker will have prepared for the worst during the initial application process and will have ensured that all risks are minimised.

How Can I Be Sure I Will Not Face Hidden Charges?

Nothing can be more damaging to a business then any hidden financial charges; however in contrast to the cloudy agreements offered by the banking authorities, a commercial mortgage broker will ensure complete transparency throughout the entire process.

In the hands of the right broker, all charges and all fees will be made abundantly clear before you sign on the dotted line.

As the middle man working between clients and a portfolio of lenders; the success of a commercial mortgage broker will only lay in the success of client dealings.

Who Do I Need To Talk To?

As with anything and everything in business; you must scour the market to search the right deal and the right lender for your business. Although the high street lender may seem like the easier option, your business could potentially and quite greatly benefit from seeking financial aid from an independent source.

An impartial and specialist commercial mortgage broker will scour the market to search for the ideal solution to suit your business and will ensure you have access to the best rates and the most appropriate solutions.

Will I Need To Provide Anything?

During the commercial mortgage application process, many lenders will require specific information to secure your lending:

  • Financial history of the business for a minimum of three years
  • Business Plans
  • Miscellaneous Information

Once in possession of the required information; a specialist financial lender will begin processing your application and determine whether a commercial mortgage is the right financial solution for your business.

If in need of financial assistance then why not consider a commercial mortgage as the financial route for your business?



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