As a business grows, expenses grow right alongside it. For many successful operations in Pennsylvania, the next step often involves the acquisition of a storefront or other type of commercial real estate. Unfortunately, building and maintain a commercial space carries a prohibitively high sticker price. This is where commercial real estate loans come into play.
For this post, we’re exploring commercial real estate loans and how they work in PA, as well as the steps that business owners need to take before they can secure funding for their commercial building or space. As always, remember that business and real estate law are very complex areas of the law, and a blog post can only offer general information. If you’re seeking more in-depth assistance, we invite you to reach out to us at Egbert & Barnes, P. C.
For the time being, here’s some essential facts to know about Pennsylvania commercial real estate loans.
Commercial Real Estate Loan Terms in PA
Commercial real estate loans are not like private home loans and in fact carry a few disadvantages when compared to traditional housing financing. For one, they carry much higher interest when the loan is intended for a commercial building vs a residential one. Options for getting a lower interest rate are limited, and a business owner who is looking to minimize interest will need to either provide additional collateral or invest as much of their own money as possible.
The duration of the loans ranges from 5 to 20 years, making them a major commitment, Many commercial real estate loans also require a “balloon” payment, which is a final lump sum amount that is paid out towards the end of the loan. This final payment is notably larger than the average monthly payment as it’s meant to clear out the remaining balance for good.
Furthermore, business owners have several options when it comes to picking out a lender. In Pennsylvania, two main sources of commercial real estate loans include banks, who often require a significant amount of collateral, and the state’s SBA 7(a) Loan Program. This program, hosted by the PA Small Business Administration, loans out over $20 million on an annual basis for business owners who either want to secure a new commercial building/space, or repair and furnish older, existing structures.
Applying for A Commercial Real Estate Loan?
As you can see, securing a commercial real estate loan in Pennsylvania is not a simple process. Fortunately, the seasoned business law attorneys at Egbert & Barnes, P. C. are here to answer any and all questions you might have when it comes to applying for and securing funds for your commercial space or building,
We work diligently to help walk you through the process and can review all important documents, including the application itself, to ensure that there are no mistakes or oversights. At Egbert & Barnes, P. C., we make it our mission to help you boost your chances of being qualified for a commercial loan!
Call Egbert & Barnes, P. C. today to learn more, and to schedule a free initial consultation.