For many commercial real estate owners or buyers, banks almost ignore their needs. So why not? They got very cheap [near zero interest rate] funds from the Fed, they can buy US Treasury bonds without any risk.
As a result, a large number of business people among these merchants have had to obtain commercial bridge loans on their commercial real estate in order to spend years before commercial credit is released or sold. Although these loans are not cheap, they may mean having to rely on their own property to lose property. However, certain conditions for these loans or mortgages are that potential borrowers need to be vigilant. Here are five key value tables you need to be aware of.
1. Prepaid fines - Commercial borrowers need to try to avoid prepaid fines, just like the subprime mortgage crisis, which can seriously damage your future refinancing or sales plan. No prepayment penalty will give you more flexibility.
2. Term of the loan - The commercial borrower needs to ensure that the period is long enough to move to the next stage, whether it is refinancing or sales. A short term can get you back to the hot water. If you avoid prepayment fines, then as an insurance, the period required will not exceed the deadline.
Too little borrowing - you need to make sure you borrow enough money to make up for those small [or big] accidents. Again as the second one above, it's just a good insurance, especially during these uncertain economic times.
4. Borrow too much - Yes, I know that I just warned not to borrow too little but you can easily overfire and consider exceeding your needs. If you are buying or building a commercial building, borrow enough money to cover all the "flowers and whistles" that are best done in the future cash flow of your property or business.
5. Using the wrong loan structure - Commercial bridge loans can be built in a variety of ways. Make sure you don't just take the first loan structure that the lender provides to you. Be creative. You may want an experienced third party to help you determine which structure is best for you and your business. Remember that lenders will recommend things that are in their best interests. If it is different, you need to fight the way that suits you and your business.
So, when you get a commercial bridge loan, you need to understand five things. Write down them and use them when negotiating commercial bridge financing terms.
Orignal From: Commercial Bridge Loan Seeker, here are 5 commercial bridge financing
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