Tips for Refinancing a Business Mortgage

Many commercial real estate owners find it beneficial to refinance their mortgage as circumstances change such as a need to remodel portions of the property, lower interest rates or an increase in cashflow. This process can greatly improve the financial situations of business owners, but you will want to understand how the benefits will impact your company, what the options are and how to prepare the paperwork before you get started.

Understand the Benefits

One of the biggest benefits to refinancing a mortgage is to lock in a lower interest rate. This saves you money over the course of your loan and can free up cash flow for smoother running. Other benefits include lowering monthly payments by extending the term of your mortgage, avoiding a balloon payment at the end of the current mortgage term, and tapping into the equity you have in the property with a cash-out refinance option. Each of these can provide a financial boost to your company and allow you to balance the books easier.

Know the Loan Options

When refinancing your commercial real estate mortgage, a good place to start is by looking at the options you have for new loans. These include SBA loans, bank commercial mortgages and private lenders which will each have their own qualifications and restrictions for being approved. For instance, the Small Business Administration requires that you apply for, and are denied, bank loans before their loan programs can step in to assist you. Private lenders usually have higher interest rates and shorter terms but are easier to secure if your credit history is less than perfect.

Get Your Paperwork in Order

To refinance your commercial mortgage, you will need to choose a loan option which works best for you and then get your application turned in. The more paperwork you can provide to show the current state of your mortgage and company financial situation, the easier it will be to show the lender that you are worth the risk they would be taking. This means having a business plan ready to go along with personal and business financial statements, past years’ tax documents and your current loan agreements.

Refinancing your commercial real estate mortgage can offer you many benefits such as lower interest rates and lower monthly payments. You can choose from a couple of different loan and lender options to find the right terms for your needs and then get the necessary paperwork in order for the best approval chances.


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