Home | Business | Financing | Venture Capital

Business Finance and Commercial Mortgage - Home Loan Differences

With the increasingly chaotic investment climate for residential financing in the United States, more residential real estate investors are exploring commercial real estate and business finance opportunities. It is important for prospective commercial property owners, business owners and business investors to educate themselves about options for the business loan and commercial mortgage environment they will be facing.

There are numerous significant distinctions between commercial real estate investing and residential real estate investing. Of over 20 major commercial loan differences, several important issues will be covered in this business financing article and other commercial financing elements will be described in additional reports.

Stated Income Commercial Mortgage Opportunities

Stated income commercial loan programs will preclude the need for personal tax returns to qualify for a business loan. However the stated income commercial mortgage will not change documentation requirements involving income for the business being purchased. In contrast to residential mortgages, no doc (no documentation) loans are not possible for commercial financing.

Down Payment for Business Opportunity Financing - Business Finance

Down payment requirements for buying a business commonly vary from 10% to 25% or more. The specific amount will depend on business experience of the borrower, requirements for business opportunity business finance, type of business and credit scores.

Business Finance Minimum and Maximum Amounts

A commercial real estate loan less than $100,000 is difficult to arrange. $2 million is the prevailing maximum for a stated income commercial loan. Many other business loan options are restricted to $5 million or less.

Commercial Mortgage Interest Rate Expectations

Business finance interest rates are commonly more than residential financing interest rate levels, with an average current range of 8% to 12%. It is usually feasible to have variable and fixed business loan rate choices. Financing for a business opportunity will usually have higher interest rates which are generally in the range of 1-3% more than a similar commercial mortgage.

Commercial Mortgage - Business Finance Personal Guarantor Requirements

In most situations individuals owning over 20% of a business will be required to personally guarantee a business loan. Although it is common for a business to be operated under a corporate ownership structure, personal guarantees from the principal owners are nevertheless required for most business financing. Individual credit scores of all principal business owners will be reviewed as part of the qualifying process for a commercial mortgage.

Appraisals for a Commercial Mortgage or Business Opportunity Financing

Commercial real estate appraisals are much more expensive and complex than residential appraisals and typically take several weeks to complete. The basis for business loan and commercial mortgage value is primarily based on the income generated by the business rather than an analysis of comparable properties prevalent with residential mortgage loans.

More Business Finance Differences

There are simply too many important distinctions between commercial mortgage situations and residential mortgages to describe fully in this article. Commercial borrowers interested in a more comprehensive discussion about recall or balloon terms for commercial financing, special purpose commercial property financing, refinancing an SBA loan, buying a business opportunity and how to avoid major business financing problems should see the additional reports we have prepared on this topic.

Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved.

Article Source: http://www.find-investment-advice.com

S.A. Bush provides candid business financing and commercial mortgage advice. Free AEX series of Commercial Loan - SBA Loan reports

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Venture Capital Articles Via RSS!

Additional Articles From - Home | Business | Financing | Venture Capital

Types of Blogs - By : raman chauhan
Why Web logs are so SE Friendly and Profitable - By : raman chauhan
Why Keyword Focus & Density Matters - By : raman chauhan
What To Say In Your Blog - By : raman chauhan
Do I need to be cautious before going into Joint Ventures - By : kumarpankaj
Surefire and proven techniques of Internet and joint venture marketing - By : MONIKA
Surefire and proven techniques of Internet and joint venture marketing - By : MONIKA
Know more about joint venture loans - By : JAIPREET SINGH
Joint Ventures Enjoys Benefit With Business Architect - By : navdeep singh
If You Want To Be Published Then What Publishers Want - By : raman chauhan

	Print This Article
	Post Comment
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Top Authors
Most Popular Articles
Submission Guidelines
Article RSS Feeds
Blog

Adsense Websites
Bankruptcy Help
Chocolate Recipes
Ebay Selling
Mortgages
Payday Loans
Video Ipods
Weight Loss

Best Health Articles
Find Affiliate Advice
Find SEO Advice
RSS Feed Directory
Currency Trading Guide