What is next for your business? Maybe you are just buying your first business location and need a little extra money to get it started. Maybe after a couple of years after buying your storefront, it is finally time to do your dream renovation. It might be time to save some money and refinance your previous business loan. Your next steps could benefit from a commercial real estate loan. Chickasaw Community Bank has experts ready to answer any questions or give advice on your next business step.
What’s the difference between a commercial real estate loan and a home loan?
A commercial real estate loan differs from a residential loan as commercial property is regarded as income-generating. A home loan is only for a place where you would plan to reside. So while you would get a residential loan taken out for any repairs or refinancing on your house, a business would need to take out a commercial real estate loan. This would also apply to if your business is planning to renovate or redesign your business property.
Instead of an individual applying for a residential home loan, a business or group would be applying. The business taking out a loan should be prepared to offer their goals for their business as well needs their business has for the loan. A commercial real estate loan can also have a shorter loan term. While residential property loans tend to be around 15 to 30 years, a commercial real estate loan can be around 5 to 20 years depending on the amount taken out.
What if my new business is new and does not have past credit?
If your business is new or has no past credit, you can have a guarantor co-sign on the loan. Usually, the guarantor is the owner or owners of the business. In this case, if the loan is failed to be repaid, it will be defaulted to the owner to repay the loan. In some cases, the property itself can be put up as collateral instead of or in addition to having a co-signer.
What is the difference between an owner-occupancy loan and an absentee owner loan?
An owner-occupancy loan is a loan of a person who is actively using the property the loan was taken out for. The owner-occupant can still be a landlord of a property but must actively manage it. An absentee owner differs from a landlord by hiring a third party to manage the property. They do not directly manage the tenants themselves. The absentee owner is more of a silent owner or investor of a property and is not involved in any of the day to day management of the property.
If you are still unsure if a commercial real estate loan is for you and your business, Chickasaw Community Bank has a team of advisors to help guide you in your next financial steps. (https://www.ccb.bank/contact-us)