Commercial Mortgage Financing For Your Business Finance Needs

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'Commercial Mortgage Financing is a challenge,' commented one of our clients recently. We certainly agree, but there are solutions, options, and strategies for the Canadian business owner and financial manager who invest time investigating the proper commercial mortgage financing alternative for their Canadian business. Let's dig in!

The 2008 and 2009 financial crises (worldwide, by the way!) affected every financing aspect. Many financial people still believe commercial real estate financing still has the ability to become more problematic. Only time will tell on that one, but in the meantime, if you are properly prepared, and you know which solution you need, there are still some great alternatives for Canadian business owners. In the context of our article, we are discussing owner-occupied commercial real estate.

When clients come to us to discuss their commercial mortgage financing needs, they have some particular needs that can neatly be put into a couple of categories -

3. They wish to redo a first or get a 2nd commercial mortgage to undertake leasehold improvements, expansion, or, finally, use additional funds for working capital, cash flow, and other forms of possible debt repayment.

For the last several years, before the current challenging environment, much transaction could be financed at greater than 65% LTV. By LTV, we mean, of course, loan to value, i.e. how much you can finance against the property's appraised value.

We are happy to point out that there are some circumstances in which financing for up to 90% LTV, in some cases 100%, still exists, but they are clearly the rarity, not the norm.

Of course, the greater equity or down payment requirements put additional challenges to the Canadian business owner who must give up that equity or make a greater down payment.

While we find that many of our clients are never totally familiar with all their business financing options, we can also state they are even less familiar with their commercial mortgage financing options on their business properties.

It is absolutely recommended that they work with a trusted advisor who had credibility, experience and a track record in this area. Planning also helps, by the way, and we encourage the customers who come to us to allow 30-60 days for typical commercial financing from the point that they walk in our door.

Key information required to assess the best Canadian commercial mortgage financing alternative is the facility description and any appraisal, as well as your financial statements. We find it is of great value to ensure these statements accurately reflect your ability to pay back the new financing.

Therefore cash flow coverage, interest coverage, etc., are all key parts of the equation. Naturally, if you are leasing premises and are going to an owner-occupied facility for which you are financing, the lease costs you are paying now positively affect that equation.

There are currently some excellent commercial mortgage financing alternatives for both first and second mortgages. Each business owner has a different focus on their 'hot points,' whether that be loan to value, getting approved, ensuring the amortization is long enough, or even flexibility to pre-pay or refinance.

Is it ' easy ' to get commercial mortgage financing in Canada? We would say no, is it possible and very achievable with the right data and advisor - absolutely. The right financing will only enhance your owner-occupied facility and ensure you are building a business or personal equity.

Click here for the business finance track record of 7 Park Avenue Financial.

' Canadian Business Financing With The Intelligent Use Of Experience '

Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Commercial Mortgage Financing 7 Park Avenue Financial

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