As a business owner, you may find yourself sitting on significant assets such as real estate, cash, intellectual property or inventory. You can often tap into your company’s commercial real estate assets through commercial mortgages. 

A commercial mortgage is a business loan that is backed by a business’s property. Commercial real estate lenders may offer a variety of terms ranging from short repayment plans (such as 1-2 years), or long repayments plans (such as 25-30 years). Businesses eligible for commercial mortgages include investment and development real estate in addition to owner-user real estate.

Begin the Process

When looking into the possibility of securing a commercial mortgage, be aware that lenders will assess the value of the commercial real estate and business itself, the business owner’s credit rating, and the business’s revenue and cash flow before determining whether or not to approve the mortgage. No two lenders offer exactly the same commercial mortgage terms, so speaking with more than one lender may be beneficial to you for securing the best terms for your needs.

Consider Refinancing

If you already have a commercial mortgage for your company, refinancing your current mortgage may benefit your bottom line. For example, in times of low interest rates, you may be able to lower your commercial mortgage payments by refinancing. This could allow you to put those saved funds to use by reinvesting them in the business.

Secondly, extending the length of your mortgage term is another reason refinancing a commercial mortgage may be beneficial to your business. Some lenders may allow businesses to extend their mortgage terms for a considerable amount of time. This could drastically reduce the payments for the mortgage and free up a hefty sum of cash.

Review Refinancing Options

Several refinancing options exist for commercial mortgages; including private lender mortgages, bank commercial mortgages and Small Business Administration (SBA) mortgages. Private lender mortgages are provided by investment groups or individuals. Private lenders have the flexibility to create different terms than those of traditional bank mortgages. Bank commercial mortgages typically offer the lowest refinancing rates. SBA commercial use conventional lenders but reduce the risk to the lender by covering a portion of the loan amount in the event of a loan default.

If you currently hold a commercial real estate mortgage and could benefit from a lower interest rate or different loan terms, a commercial mortgage refinance might be beneficial to you. You could wind up actually saving money each month, and use the extra cash to grow your business.