How Commercial Lending works:
Financing for you next commercial real estate project.
Funding for Multi Family, Warehouse, Industrial, Office.
Up to 90% LTV 50,000,000 available
Quick response and very competitive commercial loan rates
YES we can fund your next development – give us a call to start.
Benefits of Commercial Lending:
- Fast and easy to qualify
- Interest Only Payments
- Allows you flexible short term options 3- 60 Months
Just complete the Get Started and we can give you a quick no obligation quote. ———>
Rate and Terms
UP TO 90% LTV
3-60 Months, Interest Only
From LIBOR + 350%*
Just Funded by Level 4 Funding
One of the trickiest aspects of commercial lending is figuring out whether or not the borrower is going to have an increase in interest or not. This is not easy to predict, because it depends on the strength of the market and the actions of the federal government, but there are ways to minimize the impact of a possible increase.
This is one of the most stressful aspects of sustaining a commercial loan, largely because there is nothing that the individual borrower can do to stop an interest rate increase on the federal level. Commercial lenders are not in flux from day to day, but over the course of three to five years, there is bound to be a change. However, that does not mean that a borrower cannot take steps to try and control various aspects of the loan that might be affected.
One of the ways that borrowers can eliminate this potential increase is by signing a fixed rate loan. Essentially, this locks the lender and the borrower into the interest rate that is the going rate at the time of signing. This way, rather than having your monthly payments fluctuate further down the line of your term, you will know exactly what to expect. The issue here, is that if rates go down, you will not be able to capitalize on the lower interest payments. This is very similar to a residential mortgage with the same fixed rate term. In this way, a borrower can easily budget for their commercial lending loan rate.
However, fixed rate commercial loans are difficult to obtain. Because of the increased risk for lenders in capitalizing on their investment, these loans are typically reserved for borrowers who have excellent credit or a tremendous amount of security provided through collateral. If you can manage to secure one of these loans, it is a good idea because, even though commercial rates don’t change a tremendous amount, there is bound to be some change over time.
If you cannot manage to secure a fixed rate commercial loan, the next best thing that you can do is to build a potential increase into your strategic plan for the property development. If you can stay ahead of the rate of inflation and increase your profit margin during the time when the interest rates remain set, you will be well positioned to have minimal impact when the rates do increase. If the rates go up, you will have excess capital to absorb the increased monthly payments. And if the rates go down, then it will mean even more capital for current or future investments. In either case, you must plan for your commercial lenders to change over the term of the loan.
How much of a change can I expect with commercial real estate loan rates?
The reality is that while there is bound to be some change, it will not be drastic in either direction. Over the course of 20 years, if your term is that long, you can probably expect to see a change of a handful of percentage points. In the past few years, commercial lending rates have been incredibly low, so it is a safe bet that they will gradual begin to increase.
As much as property investments are on the safer side of investments because of their physical collateral, there are still inherent dangers for both the borrower and the lender. Any time you venture into the commercial real estate financing world, you are running the risk of loss.
It is no secret that the upside of commercial investment and property development can end up being quite lucrative for the savvy and prepared investor. But such windfalls do not happen simply because of blind luck. There are just as many stories of the dangers of commercial lending and the massive losses that can be incurred when things go wrong.
If you are looking to get into property investment, there are some key danger spots that you will want to look out for as indicators to the overall health of the market and your property specifically. One of those danger areas is the actual physical property. Many investors and borrowers have found themselves needed more and more commercial real estate financing due to the fact that property costs and construction costs end up being far more expensive than were originally anticipated. This danger only increases with the amount of construction that is going to be necessary to make the property profitable. Not only is this dangerous in costing the borrower even more money for upfront costs, but there is also a cost associated with the time that it will take to complete. The longer it takes, the more revenue the borrower is losing. This can be very dangerous when facing monthly payments.
Another danger comes from the bureaucracy of state and local governments. Depending on zoning laws in the local area, this can be a lengthy process and has the potential of really holding up development, especially with a new build, rather than a renovation. Commercial real estate financing that is contingent upon benchmarks can really put borrowers in a bind if there are regulatory issues and lots of red tape.
There is also the potential for additional costs and dangers to arise because of the property itself, outside of new construction. This is typically true of older properties that have experienced wear and tear. Using appraisal services and staying on top of routine maintenance will help to reduce or eliminate the impact that this might have on your commercial lending.
With all of the dangers of commercial lending, what can I do to prepare?
The single greatest thing that you, as a borrower, can do to prepare for the unexpected is to acquire as much knowledge as you possibly can about the property, construction costs, timelines and local permits and codes. If you keep up to speed on the factors that might affect your commercial real estate financing, then you are much less likely to be taken by surprise, even if there is a setback. There are many things that could happen that you cannot control, but if you know about the possibilities, you are more like to already have a plan in place to deal with the situation.
Current News and Information about Commercial Lending
Equal Housing Opportunity.
*APR varies from 3.5 – 14.5%. Your loan rate and how you can borrower is primarily determined by the quality and value of the collateral, your ability to pay, total loan to value and credit score.
This is not a Good Faith Estimate (GFE) and should not be considered as such. Costs, rates and terms can only be determined after completion of a full application. Mortgage rates could change daily. Actual payments will vary based on your individual situation and current rates. To get more accurate and personalized results, please call (623) 582-4444 to talk to one of our licensed mortgage experts. Terms and conditions of this and all loan programs are subject to change without notice. Level 4 Funding LLC is licensed in the State of Arizona, NMLS 1018071 AZMB 0923961. For More Information Click Here
Lending for Commercial Development
Commercial Loans - 12 to 60 months