4 Ways Commercial Real Estate Refinancing Can Boost Your Business Capital

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4 Ways Commercial Real Estate Refinancing Can Boost Your Business Capital

18 August 2021
 Categories: , Blog

Are you looking for ways to ease cash-flow constraints in your business? You could look at your valuable commercial property as a viable source of money. Commercial real estate refinancing works like refinancing your home, but it is done using commercial real estate. If you have already a substantial portion of the loan you took out on the commercial property, you can get funds for the free amount. What are the advantages of using this kind of refinancing? 

1. Cash Out Your Equity 

Refinancing allows you to cash out the equity on your commercial real estate. The advantage is that the freed-up equity is available in cash. You can do whatever you want with your cash, such as boost inventory, renovate your commercial premises, and boost your working capital. It is the most flexible option when considering commercial property refinancing.

2. Lock in Low-Interest Rates 

Most business owners are apprehensive of variable interest rates. The trend is that the Fed keeps adjusting interest rates upwards to curb inflation. The effect is a gradual hike in commercial loan interest rates, which means you end up paying more.

Commercial real estate refinancing allows you to lock interest rates to calculate your new loan at lower rates. As a result, you can plan better with these predictable rates and enjoy lower payments than taking out a fresh loan. 

3. Avoid End-of-Term Balloon Payments 

Commercial loans mature faster than residential mortgages. Any payments that are still due at the maturity of the loan are settled in a lump sum. These payments are often called balloon payments because of the large size of the installment.  

Balloon payments can place serious cash flow constraints on a business. But most lenders do not need you to make a balloon payment if you refinance. It is a win-win arrangement. The bank makes money off your refinanced loan while you get a boost in working capital. 

4. Debt Consolidation 

Managing several commercial loans from different lenders at once can be hectic for your financial management. It can also impact your credit rating poorly if you have problems with one or several loans. 

A commercial estate loan lending program allows you to consolidate your loans into one loan from one lender. The advantage of this arrangement is you can negotiate for more friendly payment terms, including a longer payment period. It can ease your cash flow and improve your credit rating. 

Are you wondering where to get extra cash to expand your business operations? Talk to a lender about commercial real estate refinancing options.