This article is sponsored by Chickasaw Community Bank.
What is next for your business?
Maybe you are buying your first business location and need a little extra money to get it started, or perhaps after a couple of years after buying your storefront, it is finally time to do your dream renovation. It might be time to save some money and refinance your previous business loan.
Your next steps could benefit from a commercial real estate loan. Chickasaw Community Bank has experts ready to answer any questions or give advice on your next business step.
What’s the difference between a commercial real estate loan and a home loan?
Commercial property is considered income-generating. A home loan is only for a place where you would plan to reside. While you would take out a residential loan for repairs or refinancing your house, a business would need to take out a commercial real estate loan. This will also apply if your business is planning to renovate or redesign your business property.
Instead of an individual applying for a residential home loan, a business or group would be applying. The business taking out a loan should be prepared to offer the business goals they have for the loan. A commercial real estate loan can also have a shorter loan term. While residential property loans tend to be around 15 to 30 years, a commercial real estate loan can be approximately 5 to 20 years, depending on the amount taken out.
What if my new business is new and does not have past credit?
If your business is new or has no past credit, you can have a guarantor co-sign the loan. Usually, the guarantor is the owner or owners of the business. If the loan fails to be repaid, it will be defaulted to the owner to repay the loan. In some cases, the property itself can be put up as collateral instead of or in addition to having a co-signer.
What is the difference between an owner-occupancy loan and an absentee owner loan?
An owner-occupancy loan is a loan of a person who actively uses the property the loan was taken out for. The owner-occupant can still be a landlord of the property but must actively manage it. An absentee owner differs from a landlord by hiring a third party to manage the property; they do not directly manage the tenants themselves. The absentee owner is more of a silent owner or investor of a property and is not involved in any day-to-day management of the property.
If you are still unsure if a commercial real estate loan is for you and your business, Chickasaw Community Bank has a team of advisors to help guide you in your next financial steps. Visit our website or email us to get started.