Commercial Property Loans, are the friends of your business?

Every business is looking for ways to be ahead to their competitors, but, doing it is another task, that needs good strategy to attain.  You have to be smart and have the broad connection, to be able to find people or institutions, to help them with the plan.

Expansion is the name of the game.  Businesses are considering expansion physically and technically.  Whatever it is, it is for the benefit of the company.  Now, let is take a quick look on commercial property loans, is it a friend of your business?

First, we will consider the reason for obtaining a loan. Is it an immediate need for growth of the company? If getting a lone is to buy a property, to house additional machineries, then it is just fine.  The reason may be to make it as a warehouse for rising number of inventory, It may be appropriate.

In some cases, businesses are applying for a loan, because they are just renting space and wanted to move to their own property, it is reasonable. With these reasons for applying a loan, they can be considered a friend of your business.

However, obtaining a loan for reasons of buying additional property for future use, or buying it because, it was offered to you by a friend, think twice.  It may be a good idea, but, because you are not prepared for this, it may bring negative impact on your business.  In this kind of rush decision, there was no studies made and many factors was not being considered.

Is this commercial property profitable? Will it be an asset to the company? Or will it be a liability.  Obtaining a loan to buy the property will result to additional expenses to you, such as:

  1. Monthly Amortization. This will be a big increase in your monthly overhead. Imagine if this new property is not earning for you. It is possible, because it is not planned.  You still don’t know how to make use of it.
  2. Maintenance Cost. Of course, you have to maintain it, even if you are not using it yet. You have to put security personnel and cleaners.  How about electricity and water?
  3. Once you buy the property, you will do some re-touch, to its finishing. You bought it second hand, unless its brand new.

If it is well planned and careful studies had been made, commercial property loans, can be considered a friend of your business.