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Three Aspects Lenders Consider When You Apply For A Commercial Business Loan

Obtaining a commercial business loan is a bit harder than other types of real estate, because there is more risk to the lender involved. If your business doesn’t do well, you aren’t the only one who potentially stands to lose a lot. But it’s certainly not impossible – and it’s even not that hard when you have your finances straight, a clear plan and vision, and a clean business and personal credit history. You may be wondering at what Lender are looking at when you apply for a commercial business loan. While this list is not all-inclusive, as there are many types of lenders and businesses out there, it is a good initial guide to get you thinking about what you may want to pay attention to, or in some cases, get fixed. Also remember that one lender says “no” to, another may say “yes” to – it is very individual and depends on characteristics about the Lending company itself. However, these three aspects are things that are dependent upon you, the borrower.

Three Aspects Lenders Consider When You Apply For A Commercial Business Loan

  • Business Finances
  • Personal Finances
  • Property Characteristics

Any business you have had in the past, including the current one, if you are just seeking to upgrade the structure your business resides in, will be scrutinized through a credit check process. This means things like interest rates, payback period, any late or missed payments – all will apply.  It’s important to remember that one or two business mishaps from the past don’t necessarily destroy your chances of securing a loan. Lenders are looking at the entire picture, not just one aspect. There’s always risk involved, and they understand that.

Your personal finances come into play here, so it’s important to get your person credit squared away. Do you have any repossessions or bankruptcy history on your credit report? If so, it’s probably best to hire an attorney that specializes in credit clean up that can help you sort these matters out. It won’t be cheap, but definitely worth it, if your dream is to own a commercial property. On the other hand, if you just have been late on a payment or two in the past, you might be pleasantly surprised to find out it didn’t hurt your score terribly. Be sure to keep an eye on your credit through all reporting agencies and check it often, even if you haven’t had a lot of transactions. The reason to do this is so you can catch fraud and mistakes. It’s estimated about one third of Americans have a mistake on their credit report, and many don’t even know. These mistakes can greatly affect your score, and they can be correctly, but you need to be aware of your score.

The final and arguably most import characteristic that lenders consider is the actual commercial property. Where is it? Is it in good shape, or does it need a major overhaul? The fact that it needs fixed up won’t instantly disqualify you, but if it’s in a high-crime part of town that is prone to natural disasters, is going to be a service that could be an environmental hazard (such as a gas station) – a lender may give pause. It’s smart to only tackle a business that has one risk factor or none (location, type of business, part of the country.) Unless you’re able to put a significant amount of money as down payment, most lenders shy away from high-stakes loans. Instead, consider something smaller but in a better location with less crime, etc. There are always ways to achieve your dream – get creative, and do your homework.

 

In the meantime, check out these 1-click searches:

  • All Businesses for Sale
  • Office Buildings
  • Hotels, Motels & Bed & Breakfasts
  • Bars & Restaurants
  • Marinas for Sale in Key West
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  • Business Opportunities

Newest Key West Commercial Properties on the Market

Old Town creative small office space, located on the 2nd floor at 524 Front Street in Key West. Office #2 is available for lease starting February 11th approximately 115sf, perfect small space for a couple of desks, shared sitting area, porch & kitchenette. Location is in the Heart of Old Town in the Cruise Ship District. All utilities included. In addition to monthly rent quoted is sales tax. $750 Active

524 Front Street Office #2 KEY WEST, Florida

1 Baths 115 SqFt

Great opportunity to purchase a SIX UNIT corner property!  All units are spacious with 2 bedrooms and 1 bath. Separately metered for water and electric.  Five units are month to month and one unit has a lease ending 9/2023. Close to dining, resorts, marina, and only minutes to Key West.  Ideal for investors, perfect for employee housing or owner occupier with rental income.  Prime corner 125x50 lot with ample off street parking. Sale is subject to court approval of Personal Rep. for the Estate of Co-Seller. $1,750,000 Active

6336 2nd Street Stock Island, Florida

6 Beds 6 Baths 5,394 SqFt

Endless possibilities! Rare multi-use commercial/residential building located in prime location in Old Town, Key West. Now available, 2000 sq.ft. commercial space on ground floor with 2 bathrooms and bonus office/storeroom. Upstairs are (3) three large residential apartments with a terrace. All the units have independent entrances and separate electric meters. The first apartment has 3 large bedrooms, 2 full bathrooms, stainless steel appliances & spacious balcony. The second apartment has a new kitchen with 2 bedrooms, 1 bathroom. The third unit is a large studio with full kitchen and bathroom. Enjoy the proximity to the beaches, restaurants, shopping and all the attractions. This mixed-use property is a must see! Perfect for 1031 exchange, investor, employee housing or owner occupier. As per request, rental income and annual expenses are available. Schedule your viewing today! $2,900,000 Active

1110 White Street KEY WEST, Florida

6 Beds 6 Baths 3,657 SqFt

Fantastic space available in the heart of the evening crowd across from the Opal and Ocean Key House Hotels and steps away from world famous Mallory Square, Key West's popular Sunset Celebration. High traffic location with cruise ship passengers and tourists using the old town train & trolley stationed right across the street. Ground level storefront with large display windows and approximately 1250 sq. ft. of retail space with an additional 950 sq. ft. of space that could be combined next door for a total of 2,200 sf. ft. Triple net expenses and sales tax are in addition to the amount quoted $8,300 Active

308 Front Street KEY WEST, Florida

1 Baths 9,411 SqFt

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Posted in: Business Loans, Business Solutions, Buying Commercial Real Estate Tagged: business credit, commercial business loans, commercial property risk, what is considered in a commercial business loan, what lenders consider when applying for commercial business loan

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