Commercial Solutions

Buying a business or a piece of commercial property? I can help. There are 2 ways to get this done: 1) use a local bank, credit union or other established lender or 2) use a private lender. Established banks are usually cheaper, but they will ask more questions. Have a look at the list of items the established banks will look for a nd this may tell you a little bit about which way you will be headed.

Here are some key points the established banks may want to know:

• Commercial appraisal — how does the value of your purchase compare to businesses that have sold recently (these appraisals can cost between $500 and $3500, depending on the type of business and work required)?
• Cashflow —  What kind of income will the investment produce ( a rental apartment building will have a maximum rent figure based on estimated rents, but community vacancy rates will determine how much of the maximum rent you will be allowed to use
• Use of property and future development
• Business plan
• 2 years business financials and proof of no taxes owing
• Resume —  What have you done, what is your experience level, and what is your commitment to the project
• Downpayment —  what kind of personal resources will you be putting on the line
• Assets —  Assets identify what you have done with the wealth you have accumulated so far. Assets also offer potential sources of emergency cash.
• Liabilities —  How much do you owe and to who? High credit card debt can be a sign of poor financial planning and inability to meetmonth to month obligations. High line of credit debt can be seen as good financial management if your assets are higher
  than liabilities, and you can show income generated from your investments
• Credit score —  700 can be a starting point for many commercial mortgages
• Commercial mortgages—  can take between 30 and 90 days to complete

Not every lender asks for the same items. The list is not meant to be comprehensive, just a guide. Each commercial loan is different, so interest rate, downpayment, disclosure requirements and loan type will vary. If you have a specific property type or business you would like to buy, contact me steve.bucher@migroup.ca.