Buying a property for your business can be a time consuming and stressful task. Getting the best commercial mortgage loan is vital to the long term success of your business. Convincing lenders of your creditworthiness can be difficult, particularly if your business is relatively new. We hope this article can provide you with some pointers to make sure you get the best commercial mortgage loan for your business.

A commercial mortgage loan is similar to a home mortgage loan, but there are some important differences. You will need to be persistent and resourceful just as you are in the rest of your business decisions.

Why should I purchase my property instead of leasing?

Purchasing a property is a big decision for any business. There are several advantages that come with owning a property by using a commercial mortgage. These advantages include:

• Fixed overhead costs
  
• Potential asset appreciation
  
• Mortgage payments may be cheaper than rent
  
• Potential tax advantages

Those are the advantages. What are the disadvantages?

There are several potential disadvantages to owning your property. You should consider them carefully before deciding to purchase a property and seek a commercial mortgage loan. Potential downsides include:

• It will be harder to relocate your business
  
• You will need cash for a down payment
  
• You will be responsible for building repairs and maintenance

What is the typical length of a commercial mortgage loan?

Commercial mortgage loan terms can range anywhere between 5 and 25 years. The typical commercial mortgage loan would be 20 years for a new property and 15 years for an older property.

How much cash will I need for a down payment on my commercial mortgage?

Lenders tend to view a commercial mortgage loan with a larger down payment as a more secure loan. Most lenders will like to have 20% to 30% of the purchase price as a down payment. Remember the larger your down payment the less money you will need to borrow.

How can I improve my chances of qualifying for a commercial mortgage?

Be prepared to demonstrate the creditworthiness of your business when applying for a commercial mortgage. You should be able to demonstrate the ability of your business to generate positive cash flow so that the lender will be confident of your ability to repay the loan. It will be extremely beneficial if you can show the lender a history of your earnings and a projection of your future earnings. Also expect the lender to have a real estate appraiser assess the market value of your property. This will help the lender ensure that the property is sufficient collateral for the commercial mortgage loan.

Who is responsible for the repayment of a commercial mortgage?

The legal structure of your company will determine who is responsible for the repayment of your commercial mortgage and who will be liable if it is not repaid. It is a good idea to consult with an attorney before beginning your search for a commercial mortgage. The attorney can advise you of any potential pitfalls or liabilities.