Commercial Property Loans Will Jump-Start Your Business
Posted on July 9, 2010
Filed Under Debt Relief, Loans, Mortgage, Personal Finance, Refinancing Solutions | Leave a Comment
Commercial property loans are commercial loans made which use real estate as collateral.
Commercial property loans are a lot like residential property loans, except that the collateral is a commercial building rather than a residence. Usually a business will take on a commercial property loan, rather than an individual.
The borrower may be a partnership, incorporated business, or limited company, so assessment of the creditworthiness of the business can be more complicated than is the case with residential mortgages.
Some commercial mortgages are nonrecourse, that is, that in the event of default in repayment, the creditor can only seize the collateral, but has no further claim against the borrower for any remaining deficiency. The general reason for this is twofold: many laws significantly prevent the creditor from going after the borrower for any deficiency, and mortgages structured for sale as bonds give a higher priority to constantly receiving some sort of income and therefore require a clause which allows the lender to take the property immediately, regardless of bankruptcy proceedings that the borrower might be going through.
A commercial property loan can possibly be supplemented with a general obligation of the borrower, as well as with a personal guarantee from the owner of the property, which makes the debt payable in full, regardless of whether or not the foreclosure on the mortgaged collateral doesnt satisfy the outstanding balance.
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