Facts about commercial real estate loan
Commercial properties have a potential to give good returns; therefore, a lot of investors prefer commercial investments. Shopping malls, multiplexes, IT spaces and branded retail outlets are among the most popular commercial properties in India. With the mention of acquisition of a property comes about a requirement of a loan. This article talks about a few facts surrounding commercial real estate loan.
Qualification for commercial real estate loan: The sanction for a commercial real estate loan is a tedious and more complicated procedure as compared to a home loan sanction. Almost all banks ask for several years of tax returns in order to give a go ahead for a commercial real estate loan. Moreover, loans for commercial properties such as eating joints or restaurants are more challenging than loans for office spaces or retail buildings.
Higher rate of interest: The commercial real estate loan has higher rate of interest as compared to the rate of a home loan; therefore, anyone applying for the loan should before hand calculate the re-payment capacity.
Vast documentation: The document scanning during a commercial real estate loan is vast and almost tedious. Every legal document of the organization starting from income statements to profit and loss statements, balance sheets to statements of cash flow are required. Other than the documents relating to the business, there is also a requirement of the personal legal documents to evaluate the background.
Loan sanction: As there are numerous phases involved in commercial real estate loan, the sanction of it from bank takes several weeks. Therefore, make sure that you are really transparent and organized in your approach to avail a commercial real estate loan.
The more knowledge you acquire about commercial loans, the better decision you can make about the commercial real estate investment and the process would also be easier and speedy.