A ratio of 1.25 or greater is a typical requirement. Banks and commercial lenders will need to look over your books to verify that your business has the cash flow necessary to repay the loan.Ī lender is likely to calculate your company’s debt service coverage ratio, which is defined as your annual net operating income (NOI) divided by your annual total debt service (the amount you’ll have to spend paying back principal and interest on your debt). Typically, commercial real estate loans require a lot of scrutiny - small businesses are considered risky, and many don’t end up succeeding. These requirements likely pertain to your business’s finances, your personal finances and the property’s characteristics. Lenders typically have three sets of requirements before granting a commercial loan to your small business. To get a commercial real estate loan, you’ll need to decide on the type of commercial loan you need - depending on the property and business - and then narrow down your lender options. Lenders usually require that the property be owner-occupied, meaning that your business will have to occupy at least 51% of the building.
Where to get a commercial real estate loanĬommercial real estate loans are generally used to purchase or renovate commercial property.
#500k commercial loan calc how to#
How to prepare for the application process.How to get a commercial real estate loan.
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