Growing Companies May Need A Business Mortgage


At some point, all businesses may need some additional income whether for expansion, to purchase new equipment or for office furniture. Seeking a business mortgage can help them obtain their financial goals, while still staying on track to success. Whether the money is to purchase a new property or perhaps a second property to use for expansion, the equity and security of the business is usually used as part of the collateral for the loan. Business mortgages are customized for business owners and may carry different interest rates and terms than traditional loans carry. Therefore, before getting a business loan, you should research exactly what your options are.

A business mortgage will require more than the business records in order to qualify for a mortgage and although the records will become and integral part of the application, it will only show the past income and possibly potential income as well as the company's history of paying off debt. The company itself will have a limited credit history so the history of the owner or the person accepting responsibility for the payment of any debts will also be required before any business mortgage can be issued.

It is not unusual for the first loan a business receives to be based solely on the history of the owner. It is their promise to the lender to repay the loan that the bank is using for the basis of approval. An established business with little outstanding debt may qualify for a business mortgage for expansion or acquisitions, but the loan will still be based on previous information gather on the business owner.

Many times it can be difficult for a person to obtain a business mortgage when they are first starting out in that business and if their credit history is short of perfect may be repeatedly turned down for funding help. Although there are many companies willing to take the risk of extending credit to someone with bad credit, loans on this type of business mortgage are usually accompanied by the maximum interest rate allowed by law.

In some instances a company may accept the higher interest rates if it can negotiate lower rates after a certain amount of time has passed during which all loan obligations have been met. Higher interest rates translate into higher mortgage payments that affect the company's bottom line. With higher expenses the company may be forced to increase prices in order to meet its obligations and by raising prices could find themselves higher than the competition, resulting in less sales

Someone with a personal credit rating in good standing and a good plan for a business clearly showing an expected profit as well as a time table to achieve the profit, can typically be successful in a search for a business mortgage. The old saying that it takes money to make money is essentially true, but in some cases the person's ability to repay a loan along with a good history of repayment can be used as money in hand.

by: James Copper

About the Author:

James Copper is a writer for http://www.commercialfinancespecialists.co.uk where you can find useful information on commercial mortgages



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