Commercial Real Estate Loans: Common Mistakes

2007-03-22 16:46:53

( Business )



Commercial real estate loans can be crucial in starting up and financing a business. Unfortunately, some business owners are in so much of a rush to start that common commercial real estate loans mistakes which could have been avoided, are committed. If you want to make a success of your business, you have to make sure to avoid the common mistakes in taking out commercial real estate loans for the purpose of financing a business.

The first and the most critical mistake you can commit is not doing enough research to find what commercial real estate loans are available, what types of interest rates each loan offers, who’s offering the loan and other key information like this. Most start-up businesses go with the first loan offered. In consequence, these business owners end up with commercial real estate loans which have a higher interest rate than necessary. Do not make the same mistake by proactively seeking commercial real estate loans options that you can qualify for.

Another mistake that you must avoid in financing a business through commercial real estate loans is taking it all on by yourself. Unless you have experience in commercial real estate law, it is extremely advisable to retain a commercial real estate lawyer to make sure that you are not getting a raw deal. You need a proficient lawyer to help you clarify the contract stipulations, and if possible, cut you a better deal with your commercial real estate loans company.

You must also avoid going in unprepared. Commercial real estate loans are necessary, yes. However, you must first determine how important getting one is in financing a business. You must be able to quantify its value in terms of clear and bottomline figures so that it will be clear to you and to your business partners why you need this financing help. You must also have a clear and realistic business plan so that you will know exactly when your business is expected to be able to pay off your commercial real estate loans.

Finally, another mistake that you may commit when financing a business is getting commercial real estate loans with no back up and any liquidity whatsoever. First of all, you will need collateral for your commercial real estate loans. Second, you also need to have some cash if you are to develop the property that you have bought. You always need cash in financing a business, no matter if you have commercial real estate loans to fall back on. Make sure that you have this so that there’ll be no delays in your business start-up and your commercial real estate loans will not be wasted.


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