subject: Growth Expansion May Require Business A Mortgage [print this page] Owning your own business can be an exciting adventure. Of course, there may be terrifying times where you have no idea how you are going to make ends meet. And there may be successful times where you are walking on the clouds. There is little more rewarding for a business owner than having to seek a business mortgage for bigger facilities due to an increase in business. However, not all lenders may share their optimism and will want assurances from the business owner that repaying the loan will not be a problem. Even incorporated businesses may have to supply financial information about the owners or principals of the business in order to obtain financing for major acquisitions.
More expansions, a business mortgage is typically easier to obtain, especially if a lender has done business with them company in the past. Having a history with a lender will usually make them feel better about extending more credit to an individual. Since most business loans are given to individuals, it usually does not take into consideration the strength of the company, rather lenders look at the owner of the business and their ability and willingness to repay the loan.
There have been business owners whose business was extremely profitable, who for personal reasons failed to repay the loan on a business mortgage. Businesses have been lost due to the owner's failure to handle their personal finances and this is one area lenders look at when making decisions on business loans. Most lenders have no desire to own a business property and when owner cannot show a good history of paying off their debts, they may be refused additional funding opportunities.
However, some lenders understand there may have been issues in the past that has smudged the owner's credit report and will look beyond the basic numbers when making decisions concerning a business mortgage. If the business shows signs of growth and the owner shows a positive recent history of financial responsibility, many lenders are willing to take a chance. With most business mortgages however, the amount of the loan may not be able to 100 percent of the appraised value of the property.
Historically, except for those with stellar credit reports, 60 to 80 percent of the property's evaluation is typically the ceiling lenders are willing to go for commercial properties. This means that potential buyers must be able to put the balance down on the property before a lender will consider issuing a business mortgage. Lenders are also not concerned with where that money comes from, unless the business owner is receiving a loan from another lender for the down payment, which puts them in debt for 100 percent of the purchase.
Overall, receiving a loan for business acquisition of property is a fairly straight forward business transaction with many lenders. For potential borrowers with questionable credit ratings it can be lengthy process as they attempt to convince lenders of their intent to repay the loan and have the ability to make the payments, according to the loan contract.
