Commercial real estate loans work by granting businesses the working capital needed to purchase a new commercial property, refinance, or work on renovations for current commercial real estate. The loan is a mortgage secured by liens on the commercial property. Lenders will take into consideration the loan-to-value ratios, which means the process for getting approved varies greatly from a traditional residential mortgage.

A small business that wants to apply for a merchant cash advance must have accounts receivable such as credit/debit card sales and invoices. After they apply, the alternative funder will need to review credit card processing statements, business bank account statements, invoices, and other important documents.Any company that has the intention of purchasing a new commercial property, renovating a current commercial property, or refinancing a commercial mortgage should consider applying for a commercial real estate loan.

While many small business funding companies use personal or business credit as a factor when looking at your financing application, it’s not the only determining factor as to whether an application is approved or not. Most alternative smA commercial real estate loan makes sense for your company if you intend to use the working capital for commercial real estate. This type of loan will not work for primary or secondary residential residences. In addition, interest and repayment terms vary greatly from a residential mortgage.

Requirements vary depending on the lender and type of loan your business is looking to apply for. As a general rule, lenders will take into consideration your business financial statements, your company’s debt service coverage ratio, property characteristics such as property use and value, and percentage of expected/current occupancy.

Rates depend on the lender the business works with and the type of loan you’re looking to apply for to secure a mortgage. As mentioned, these rates are very different from a traditional residential mortgage loan, so please consider this before applying.