Commercial Mortgage Loans – Borrower Cash Requirements Are Higher Today
Aside from the fact that most banks and commercial lenders ask for not so normal requirements for loan approval, most banks also require a bit of a cash requirement when getting a commercial mortgage loan. And not just a bit of cash but a bit high amount of cash that is.
How Much Does The Bank Require
Most banks and commercial lenders need at least 20 up to 25 percent cash when getting a commercial loan. This still depends on what kind of commercial loan you are after and since it’s a percentage of the property’s price, the higher the value of the property, the higher the cash requirement will be. Imagine getting a $5 million loan for a commercial property. That alone would cost you around a million to one and a quarter million dollars. That’s just the cash needed, we haven’t talked about the other requirements that the bank needs before you get approved.
Is There a Way to Lessen it?
Aside from getting a lower loan amount, there is no easy way to lessen the figures. But it still depends on what kind of loan you are after and how much you need. If you have a credit score of 700 and the commercial property has been running for two years you can probably get a 7 to 30 year loan with just 15 percent cash requirement on your side, this means the remaining value will be financed by the bank or a lending institution. If you have a credit score of at least 680 and the property has been running for 3 years, then you can apply for a CDC/SBA 504 Loan where you can loan 90 percent of the property’s price for a term of 10 to 20 years. IF your credit score is just around 600 and you have at least 10 percent of the property’s price as down payment, you can try getting a hard money loan for a term of 1 to 3 years.
For more information about cash requirements and kinds of commercial loans, you can visit newcityfinancial.com