Commercial Mortgage Financing

Commercial mortgages help business owners buy or refinance land or a building used for business. They work similarly to any other type of business financing, with the borrower submitting an application to a lender, the lender reviewing their application/desired property, then making a decision based on the business’s financial information.

Taking out a commercial mortgage can give you the financial freedom to buy a new building or release equity from an existing owner. A commercial mortgage can also help you to extend, upgrade, or refinish the building. To capitalize on new opportunities, a commercial mortgage can help you purchase a new location.

In most cases, commercial mortgages operate based on a fixed-rate loan. This means the interest rate will remain the same throughout the term of the mortgage instead of changing as the years pass.

By purchasing or refinancing your commercial property, you can take steps to improve your business or utilize the building’s equity to pursue new opportunities!

Finding financing is about more than getting an approval; it’s about getting the right approval. But in a constantly changing market, the right approval isn’t guaranteed. With NBC, work with a partner in growth, ensuring you’ll always have the financing you need—when you need it. Our business finance advisors combine deep industry expertise with cutting-edge technology to secure deals that algorithm-based financing services can’t.

Here’s how to qualify for commercial mortgage financing with National:

• 2+ Years Time in Business
• $500K in Annual Gross Sales
• 620+ Credit Score

Commercial mortgage financing can be a game-changer for an entrepreneurs. Fortunately, National complements the many benefits of this type of financing with a streamlined process and multiple competitive offers with one digital application.

Own Real Estate

Own a commercial real estate asset—separate from your business.

Low Rates

Get competitive rates through our 75+ lender marketplace.

Build Equity

Start building equity by owning commercial real estate.

Any business that’s looking to purchase land or a building can use a commercial mortgage loan to break down the cost of that asset over a more manageable schedule. Here are a few situations outlining what that can look like.

• A law firm wants to purchase a new, larger building for their office space, but they can’t afford to front that much cash. Instead, they speak with a lender and use a commercial mortgage loan to spare their cash flow.
  A manufacturing company wants to build a new warehouse near their existing ones, but they don’t own the neighboring property. The business owner uses a commercial mortgage loan to purchase the land, which frees up their cash flow for construction expenses.
  A technology company has a mortgage on the land their facility sits upon. The monthly payment is a drain on their cash flow, so they use a commercial mortgage loan to refinance their existing mortgage for a lower payment.

These are just a few of the many situations that call for commercial mortgage financing. If you have questions about the benefit of commercial mortgage loans in your specific situation, contact National Business Capital for more information.

The main difference between commercial mortgage financing and residential mortgage financing is what the borrower is using the property for. Residential generally means that the borrower plans to live in the property, whereas commercial mortgages are for business purposes.

Here are a few of the other differences between the two:

• Repayment Period: Commercial mortgage loans are amortized over a shorter period than residential loans.
• Interest Rates: Although residential loans tend to have lower rates, the total interest paid can be the same as a commercial mortgage loan because the amortization schedule is generally longer. Interest rates on commercial mortgage loans are often variable, while residential mortgage loans are fixed on average.
• Down Payment: Commercial mortgage loans require more of a down payment.
• Qualifications: Residential mortgage lenders focus on you and your income, whereas commercial mortgage lenders care about the property and how much money it generates.

The collateral for your commercial mortgage loan is often the building or land you’re looking to purchase/refinance. If the borrower fails to honor their agreement, the lender can seize the asset to recoup their losses.

But first, the lender must find the collateral’s value. There are a few ways they can do this, including:

• The Cost Method – Lenders determine the cost of rebuilding the asset from scratch, given the current market conditions and cost of materials. This strategy is popular for unique structures and those that don’t have an abundance of similar buildings in the surrounding area.
• Market Method – This is the most popular method of collateral valuation. The lender looks into the value of similar properties in the area. What they’ve sold for previously, their location, and any other relevant factors are taken into account before coming to a final dollar amount.
• Value per Gross Rent Multiplier (GRM) – The GRM is the purchase price of your commercial property divided by the gross rent generated each year. This is primarily used for apartment buildings and residential structures.
• Value per Door – Similar to the GRM method, this process involves dividing the building’s purchase price by the number of doors, regardless of the size or utility of each room.

Most lenders use the market method, which compares the value of similar assets in the area to come to an estimated value. Still, each lender is different, and some might leverage an alternative method. If you have questions or concerns about how your collateral is evaluated, make sure to speak with your lender upfront about it.

Unlock the full potential of your building. Here are a few of the many ways commercial mortgage financing can benefit an ambitious entrepreneur.

Business Growth

Expand your business by purchasing additional commercial real estate or relocating to a new location.

Business Expenses

Refinance your building to make capital improvements, instead of paying out of pocket. 

Business Opportunities

Pursue new business and growth opportunities by taking advantage of the equity in your commercial real estate.

Better Terms. Faster Funding. Easier Process.

Finding the right lender takes time, effort, and patience, so we developed an easier way. With one application to National Business Capital, you’re matched with the most competitive financing offers you qualify for within our exclusive lender marketplace.

Our Business Finance Advisors use their experience and deep industry knowledge to find lenders that are most likely to return a favorable contract. We apply your business to them, then help you handle the following steps with guidance and strategy.

Banks take 90+ days, but we can get you funded in a few hours.

Complete our digital application to speak with our team about the offers you qualify for!