When it comes to CRE financing, not all banks are the same. The lender you choose becomes a partner to help reach your goals, so the right choice is important. The market is tight, but opportunities are out there. To not miss out, you’ll want to develop that financial partnership early.
A CRE loan is used to purchase, refinance and/or renovate a commercial property. A business owner needs to find a lender that serves their loan purpose and offers rates and terms that match their needs. Then, the business owner needs to find the right person to release that pile of cash.
Here are my five tips to get your mind on your money and access needed cash:
1. Talk to an experienced broker. Since brokers negotiate deals between parties, they are in a unique position to offer insight. They’ve made connections with effective people at national, regional, and community banks, as well as large finance companies. Creating relationships early not only gives you options, but also helps get the deal done more quickly.
2. Do your research. Know what type of loan you need and look at the details––interest rates, terms, maximum loan amount, down payment minimum, loan-to-value ratio (LTV), fees, closing costs, and the time it takes to access the funding. The details are part of what makes the loan work or not work for you.
3. Know your financial story. Get your books together. Document your business’s assets, collateral details, revenue, bank statements, tax returns, and any other relevant data. Lenders will look over your books to verify cash flow and see evidence you can repay the loan. Present a well-thought-out business plan to sell your ideas and communicate to the bank you know what you’re doing. You want to show them you’re on point.
4. Research the lender. Does the lender know the CRE market? What are their ratings with the Better Business Bureau, Consumer Reports, etc.? You want to find a lending partner with a positive CRE reputation, has other CRE investors, and excellent ratings. Again, brokers can help you as they have experience working with a variety of lenders.
5. Understand the repayment terms. Is it a 5/25? Meaning, is it a five-year term with 25-year amortization? Is there a prepayment or refinance penalty, or can you pay off your loan early without a fee? Know what you’re getting into, so you’re confident about the deal. Many brokers are also investors, so they can guide you through process.
There are hundreds of options for CRE loans. Once you find the right loan, you need to find the right banker to make your loan a priority. From my many years in the business, I know the partners to help get a deal done. I’m here if you have any questions (612-788-1552 or jeff@CEGspaces.com).
Jeff Salzbrun is the owner and broker of Commercial Equities Group (CEG). As a veteran-owned real estate brokerage, CEG has been involved in many sale and lease transactions, ranging from single offices to 250,000+ square foot buildings. At CEG, we get your deal done. We know space, and we know the CRE business.
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