What Entrepreneurs Need To Consider Before Opting For Commercial Real Estate Loans?

Entrepreneurs look for commercial real estate loans. They need a place where they can operate their businesses without hassles . Banks and other lending institutions that offer such loans also help them find proper locations for their business operations. This enables them to establish their offices, storefronts, manufacturing facilities and showrooms in a good and secure place, which is convenient for their customers to visit whenever they like.

Steve Liefschultz is a reputed banker and real estate expert from Minnesota in the United States. He is currently the Chief Executive Officer and Chairman of Equity Bank, a financial company that he owns, operates and manages in the area. This corporate enterprise specializes in offering investment line of credit and real estate loans to entrepreneurs, individuals and businesses in this region. This former property broker and lawyer realizes that banking and investments in the field of real estate help to open up new opportunities for his clients to strengthen their shareholder value.

Interest Rates

This banker and real estate expert explains that it is important for entrepreneurs to bear in mind certain essential factors when it comes to opting for a suitable commercial real estate loan. The interest rate is one of the most critical components that they need to consider because it may have a serious impact on their bottom-line revenue. A high interest rate on such financial assistance means they have to burn a huge hole in their pockets when it comes to paying the monthly installments on such loans. This is the reason why it is necessary for them to do some research and search for the financial institutions that offer such loans to the public at the most competitive interest rate.

Prepayment percentage

Another vital aspect that entrepreneurs need to take into consideration when it comes to opting for commercial real estate loans is the prepayment percentage. At the closing, these businesspersons have to pay a down payment, which is equivalent to 5 to 10 percentage points of the entire loan value. However, this amount varies according the lending programs various financial institutions offer to the public that fall under this category. It is important for them to opt for a commercial real estate loan that offers a minimum down payment percentage so that they can utilize the money in other aspects of their business.

Entrepreneurs opting for commercial real estate loans need to ask themselves certain important questions regarding the property they intend to buy or lease out for their business. These include:

  • Do they have enough money to purchase the property outright?
  • Do they need a larger commercial space to conduct their activities?
  • Can they claim a tax deduction of their interest payments and earn enough money to take advantage of a tax shelter?
  • Is the market value of their commercial property increasing or decreasing?

Steve Liefschultz further clarifies the answers to such queries can influence the decision they take regarding such financial assistance. Purchasing a commercial property to conduct their business activities is an important decision most entrepreneurs have to take and the need take into consideration the above factors.