Commercial mortgage is a type of business loan that a business owner uses to fund his requirements for acquiring new assets to expand his business. It’s quite similar to residential mortgage. The lender uses the borrower’s business property as collateral. The reason why more and more businessmen opt for this loan is that it provides the best way to fund the acquisition of business properties and also for other business purposes. The interest paid on it, is generally tax deductible. The interest rate with this loan is comparatively lower than unsecured business loans. The income that is generated from the property is used to cover mortgage payment. The normal period or term for this loan is longer than its other counterparts. Generally, the period is 10 years with a thirty year paying off or amortization. This means that the loan payment is same as a 30 year loan but in case he wishes to sell it, he’ll have to do that at the 10 year mark.
It not only gives you a huge amount of capital to fulfill your business needs but also allows you to fine-tune the repayment structure according to your convenience. It is a gainful way of obtaining fund for various business activities. You can also raise extra money to fund your other business activities using this mortgage. The approval of your loan depends on some factors like the credit record of your business and repayment capacity. For this, your last 3 years of audited financial statements, profit and loss account, balance sheet and cash flow statement will be needed to apply for this loan. This is an easier alternative to business loans. There are mainly two types of rates that you can choose for repayment namely, fixed and variable.
