Asking the right questions can help you choose a lender and loan program that best

fits your needs. Getting answers now can also save you time and money during the

loan origination process and over the life of the loan.

What is the maximum amount I can borrow?

Most commercial lenders will lend up to 75% of the property value. Some direct lenders

will lend even more of the property value. If maximizing cash is a goal, it may make sense

to pay a slightly higher interest rate in order to maximize the amount you can borrow.

More cash-in-hand will give you more to invest in your business or additional real estate.

Is there a balloon payment?

Most commercial mortgages have a 3 to 10 year term with a balloon payment due at the

end of the term. This means you’ll have to refinance or pay off the mortgage when the

balloon comes due, and start the loan process all over again. You could incur thousands

of dollars in closing costs and higher interest payments if rates have risen. What’s more,

if your business is having difficulty or you have vacancies at the time of refinancing, you

may not qualify for the new loan. Programs without balloon payments may make more

sense for you. If you are not looking to hold long term balloon payment may be a good option.

How soon will I have a solid commitment? How quickly can I close?

It is important to understand that commercial real estate loans take longer to close than

residential loans. The main reason is that an appraisal for commercial property generally

takes two to four weeks to complete, whereas a residential appraisal can be done in a

matter of days. Time frames can vary greatly depending on the lender. Most lenders typically

require a lot of documentation upfront before providing some type of credit decision.

Often lenders have loan committees that meet infrequently which can drag out the process.

When speed matters, make sure that you are working with a lender that can accommodate

your time frame. Also, be able to provide all personal and property financial information ready.