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Home | Finance | Wealth Building SBA Loan Financing Small Business Administration loan programs are an important consideration in many business financing and commercial mortgage situations. There are also problems and limitations with SBA business loan programs that should not be overlooked. While all business borrowers will not qualify for these business finance approaches, it is probable that many borrowers will benefit from inclusion of SBA loan financing. Business Opportunity Business Loan Options Business opportunity financing is unique and complex because it involves the financing of a business without real estate. Due to the absence of real estate, traditional commercial mortgage financing is not possible. The number of potential lenders will be greatly reduced, and key terms such as length of loan and down payments will be significantly different compared to a business loan involving commercial real estate as collateral. Balloon Payment Business Finance Requirements Balloon payments are used by some commercial lenders as a replacement for a valid long-term business loan. A borrower will be required to make a large lump-sum payment that is due after a few years if balloon terms are included. If borrowers cannot make the balloon payment when it is due, their remaining choices include selling their business or refinancing their business opportunity financing or commercial mortgage. Is Long-Term Commercial Mortgage Financing Possible? Long-term commercial mortgage coverage is normally offered by only a few specialized commercial lenders. Business opportunity business loans are typically limited to ten years. Commercial loan terms will be restricted to a three-year period or less by many local and regional banks. Recall Provisions for a Commercial Mortgage Business Loan From the perspective of a business owner, one of the most undesirable business loan terms is a recall clause allowing the lender to call the loan early. A lender can require early repayment of the commercial loan under defined conditions when a business financing agreement includes recall terms. The conditions which allow the lender to call the commercial mortgage often include periodic review of financial statements, credit history and tax returns. Business Loan Lenders - Think Outside the Bank The best commercial lenders for commercial mortgage and business opportunity financing are not likely to be local or regional banks. In general traditional banks are seeking a smaller role in business financing and are especially limited in their ability to handle specialized business finance situations. Because most business loan situations are more complex than residential financing, a prudent commercial borrower should search for lenders specializing in commercial financing. More Commercial Mortgage Features The business finance environment in the United States has many factors that distinguish it from residential financing. The factors not described in this report are included in other business loan reports. A few of the topics not included in this report include stated income business financing, the difficulty of refinancing an SBA loan, commercial loan appraisals and commercial financing lockout penalty fees upon sale or refinancing. Copyright 1995-2007 AEX Commercial Financing Group and Stephen Bush. All Rights Reserved. Article Source: http://www.articlewheel.com
Steve Bush and AEX Commercial Financing provide business finance and SBA loan advice. Free Commercial Mortgage - Business Loan reports
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