A commercial loan differs from a residential mortgage in that the collateral backing a commercial loan is typically a commercial property or business real estate, rather than a residential home. Additionally, commercial loans are usually taken out by business entities, rather than individual borrowers. Due to this, obtaining a commercial mortgage is often more complex than securing a residential mortgage. The process involves multiple factors that contribute to evaluating a business’s creditworthiness.
Commercial property loans
Qualifications for a Commercial Mortgage
Qualification for a commercial mortgage is primarily determined by the type of property or building being financed. While there are specific requirements for certain properties, there are also general criteria for qualification. As a business owner, it's crucial to demonstrate that your company maintains a healthy debt-to-cash ratio. Even if your business has a low credit score, it may still qualify for a commercial mortgage if the primary owner has a strong personal credit history and sufficient liquid assets. Furthermore, your business must prove a consistent track record of profitability and show plans for future growth. This could include, but is not limited to, submitting your business plan, projected earnings, and long-term goals for the company.
If you're looking to pursue any of the following to expand your business, a commercial mortgage could be a suitable option for you.
- Extending current work space
- Investing in commercial or residential properties
- Developing properties for commercial use
- Purchase of a building or space in which to do business
