Instead, the property is the sole means of recovery in the event of a loan default
Instead, the property is the sole means of recovery in the event of a loan default
A commercial property or real estate loan is mortgage loan provided for a commercial property, rather than residential. Financing commercial property can also include the costs for the acquisition, development, and construction of commercial real estate.
The loans collateral; the value of the commercial property
The creditworthiness of the business entity
The last 3 to 5 years of financial statements and tax returns
The loan-to-value ratio of the property
The debt-service coverage ratio
Commercial real estate loans provide a unique situation for lenders since a business entity may not have a financial track record or any credit rating. If this is the case then the lender may require the owners (or principals) of the entity to guarantee the loan. This means the lender has an individual (or group of individuals) with a credit history to base the loan qualification off of – and from whom they can recover payments in the event of loan default.
Although in a non-recourse loan, the lender does not require a guarantee by the owners (or principals) of the business entity to guarantee the loan.
Retail Centers
Office Complexes
Hotels
Apartments
Typically, it is an investor (often a business entity) who purchases commercial property,and then turns around to lease the space and collect rent from other businesses that wish to operate out of the purchased property. Tampa Bay Commercial property loans are made to business entities for the specific purpose of owning commercial real estate. […]